Equity Bank, with a balance sheet size worth Kshs. 673.7 billion at the end of 2019, has been listed at number 7 among the top 10 Banks in Africa in 2020 with a score of 5.82 in the overall category of the best performing banks. This is according to The Banker’s Top 100 African Banks ranking for 2020.
This year’s ranking shows stabilisation in the finances of the majority of African major lenders. The ranking, which tracks the health and wealth of the African banking sector, used an array of metrics including the overall growth performance, financial soundness, profits on capital, leverage and return on risk.
In the year under review, Equity improved on its performance with a 14% profit after tax growth to Kshs 22.6 billion from Kshs 19.8 billion in 2018. The impressive performance registered during an interest capping period was driven by a 23% growth in loan book to Kshs 366.4 billion from Kshs 297.2 billion in 2018.
Commenting on the Group’s performance, Dr. James Mwangi, the MD and CEO, said that the enhanced efficiency and cost optimization saw cost-income ratio improving to 51% from 52.4% in 2018. The Group has maintained its yield on interest-earning assets at 11.2% despite the challenge of interest capping and declining yield curve. Innovation has also been a great enabler in driving growth and is already registering efficiency gains from digitization.
On financial soundness, Equity ranked number 5 on the backdrop of an agile balance sheet with a liquidity of 52.1%, a loan deposit ratio of 75.9% and a core capital to risk-weighted asset ratio of 19.8%. The balance sheet reflects solid diversified funding with customer deposits constituting 72% of the total funding, shareholders and long-term borrowing contributing 17% and 8% respectively. The financial soundness is further enhanced by a strong capital base, which is well within both internal and regulatory limits, solid business performance and Net loans which constituted 54% of the total assets while government securities and cash and cash equivalents contributed 26% and 13% of the total asset allocation respectively.
“The ranking is an indication that Equity remains robust, despite the challenging operating environment. We have developed and adopted a sustainable business model to cushion the business as well as boost value creation for shareholders,” added Dr. Mwangi.
The Banker Top 1000 World Banks 2020 ranked Equity Bank 754 in balance sheet size overall in its global ranking, 62nd in soundness (Capital Assets to Assets ratio), 55th in terms of Profits on Capital and 20th on Return on Assets.
In the same ranking, KCB Group has been placed at position 667 globally in The Banker’s Top 1000 World Banks ranking for 2020, climbing 40 places in a survey that shows a stabilization in the finances of the majority of African major lenders.
The performance is an improvement from position 717 last year in the ranking which tracks the health and wealth of the global banking sector. In 2018, KCB was ranked 809.
In what reaffirms the Bank’s strong credentials, KCB was rated number 1 in Eastern Africa and emerged in the top 10 among African banks in key parameters such as liquidity (10), growth (3), profitability (9), operational efficiency (8) and soundness (10).
The survey analyzed close to 2,000 financial institutions globally, based on 2019 full year financial results.
KCB’s improved ranking is attributed to the Bank’s strong capital base which is well within both internal and regulatory limits, solid business performance and a well-established corporate and retail franchise.
“We remain steadfast in strengthening our socio-economic contribution to the East African region and beyond and our commitment to creating value in the economies in which we operate. The core of our business lays in driving innovation while leveraging on technology in how we do business and support our stakeholders,” said KCB Group CEO and MD Joshua Oigara.
The Banker said while the 2020 ranking shows a stabilization in the finances of the majority of African major lenders, the COVID-19 pandemic has hit Banks significantly and will take toll on lenders in key African markets, such as South Africa and Nigeria through the coming year.
The ranking includes data on more than $123 trillion of assets in 94 countries. Beyond Tier 1 Capital, it also includes additional data points such as Pre-Tax Profit, total Assets and key ratios including, Capital to Assets Ratio, Return on Capital, Return on Assets, NPL, Loans to Assets, and Cost to Income to provide an overall view of their soundness, profitability, asset quality and operational efficiency.
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