Equity Bank Group will withhold dividends for the second year in a row after posting an 11 percent drop in 2020 net profit to Ksh20.1 billion.
This is as compared to Ksh22.6 billion announced in 2019.
Loss provision grew five folds with restructured loans hitting Ksh171 billion or 32 per cent of the total loan book.
”The impact of Covid-19 pandemic made the year 2020 an exceedingly difficult year characterized by lost jobs, unemployment, lost investments and human misery,” Equity Bank Group CEO James Mwangi said.
Net interest income grew by 23 per cent to Ksh55 billion up from Ksh45billion driven by a 30 per cent growth in customer loan book and 26 per cent growth in Government securities.
The non-funded income on other hand grew by 27 per cent from Ksh30 billion to Ksh38 billion.
Several lenders in the country have recorded a shrink in profits in the year 2020, mostly attributed to the Covid-19 pandemic that slowed down business, increasing loan defaults.
According to data from the Central Bank of Kenya (CBK), Kenyans defaulted bank loans worth Ksh73 billion in the 10 months to December 2020.
As of March 2020, the total value of loans defaulted was Ksh351.73 billion, but the amount has increased to Ksh423 billion or 14.1 percent of the total Ksh3 trillion loan book for all lenders.
Currently, the ratio of non-performing loans (NPLs) has risen to 14.1 percent, the highest since August 2007 when it stood at 14.41 percent.
“Credit risk remains elevated and that is expected given where the economy is. We have done some analyses and assuming that the economy remains flat and the benefits of reopening the economy do not come through, NPLs will rise to 16 or 17 percent of gross loans,” said CBK governor Dr Patrick Njoroge in January.
Banks have already restructured loans worth Ksh1.63 trillion by end of December, an equivalent of 54.2 percent of the total loan book.
Personal and household loans top the list of debt restructured at Ksh333 billion.