Equity Group’s Net Profit Drops by 4% in First Quarter of 2025

Equity Group Holdings has announced a Ksh15.4 billion net profit for its first quarter of 2025. This marks a 4% decline compared to the same period last year in 2024, when the net profit was Ksh16 billion.

The Q1 results released on Thursday, May 29, show mixed performance, with customer deposits growing 7% to Ksh1.32 trillion, illustrating the bank’s ability to attract and retain depositors.

Net loans, which represent the actual value of loans expected to be repaid, grew by 3% to Ksh804.7 billion, indicating modest expansion in lending activities.

Total assets also rose by 4% to Ksh1.75 trillion, reflecting overall balance sheet growth. These figures suggest that Equity Group is successfully expanding its operational scale, which is crucial for a bank navigating regional competition.

Also Read: Equity Mass Firings, Hustler Fund ‘Forgiveness’, & KCB Dividends

A notable concern is the 12% decline in non-funded income (the revenue that does not come from external funding sources like grants, loans, investments, or donations) to Ksh19.6 billion from Ksh22.2 billion in Q1 2024, contributing to a 4% decrease in total income to Ksh48.2 billion from Ksh50 billion.

Mixed Results

Non-funded income, which includes fees, commissions, and trading income, is critical for diversifying revenue streams. The drop suggests challenges such as lower transaction volumes or reduced fee income, potentially intensified by economic conditions in Kenya.

This decline likely contributed to the 8% reduction in profit before tax (PBT) to Ksh18.7 billion from Ksh20.4 billion and the 4% drop in profit after tax (PAT) to Ksh15.4 billion from Ksh16.0 billion.

Operational efficiency, as measured by the cost-to-income ratio (CIR), deteriorated, rising to 54.2% from 52.5%.

This increase indicates that operating expenses grew faster than income, with total operating expenses up 11% to Ksh19.7 billion from Ksh17.7 billion.

Staff costs, a significant component, increased by 11% to Ksh8.7 billion from Ksh7.8 billion, reflecting investments in human resources or inflationary pressures.

A positive development is the 44% reduction in loan loss provisions to Ksh3.4 billion from Ksh5.9 billion. This significant decrease suggests improved loan quality or a more optimistic outlook on loan repayments, potentially due to better risk management practices.

Equity Group also reported a net interest margin (NIM) of 8.0%, down 0.7%, which shows some pressure on interest-earning assets’ profitability.

Profitability ratios showed mixed results, with return on average equity (ROAE) declining to 23.9% from 28.9%, reflecting lower returns on shareholders’ equity, while return on average assets (ROAA) remained steady at 3.5%.

These metrics, combined with the PAT decline, suggest weaker profitability, potentially influenced by the drop in non-funded income and higher costs.

Also Read: Equity Bank Fires 200 Kenyan Staff Over M-Pesa, Payroll Scandal

The report also showed broader market trends, noting that European equities outperformed U.S. markets in Q1 2025, which may draw investor focus away from African markets like Kenya, adding context to Equity Group’s performance.

Word from the CEO

“We are witnessing major shifts in behavior and rapid structural changes driven by technology adoption. This has enabled us to identify emerging trends early and we are glad we moved swiftly to align with them,” Dr. James Mwangi, Equity Group Managing Director and CEO said during the announcement.

“Through the Young Africa Works program, Equity has disbursed Ksh353 billion to 350,149 MSMEs, with 2.49 million women and youth receiving financial education and 653,372 MSMEs trained in entrepreneurship,” Dr James added.

Dr. James also praised everyone working to ensure Equity Group’s growth.

“Equity is strongly positioned across all our subsidiaries. As we continue our transformation journey, we see significant opportunities for sustained growth,” he concluded.

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