For having strong brand recognition, an established domestic franchise, an extensive digital and alternative distribution infrastructure that supports resilience and boosts profitability, Kenya’s Equity Bank has been assigned first-time ratings by Moody’s Investors Service.
“The global local currency rating captures the Bank’s strong credit profile which is closely aligned with the B1 (stable) rating of the Kenyan government,” Equity Bank said.
It was also assigned a national scale rating of Aa1 which ranks it as the best credit rated bank in Kenya.
“As the Bank enters the next phase of growth, there is a renewed need to mobilize funds to finance major infrastructural developments as well as local and regional SMEs,” said Equity Group Holdings CEO and Managing Director Dr. James Mwangi.
The Kenyan bank reinforces its corporate product offering, management team and IT reliability and capacity to improve customer service and offer a complete product suite to cross-sell to existing and new customers in the country and regionally.
It caters to SMEs and large corporates through its Supreme Banking offering with branches in key locations such across Nairobi and Kisumu; Mombasa, Nakuru, Eldoret among many other major towns in Kenya.
During Q1 2017, the Bank’s net income to average assets stood at 4.3 percent and its pre-provision income to average assets at 6.7 percent both of which are amongst the highest in Kenya’s banking system.
As of March 2017, EazzyBanking (a set of digital products) App transactions grew by 28 percent; EazzyBiz (a cash and liquidity management system for SMEs and Corporates) by 56 per cent; EazzyNet (an online platform for retail and individuals) by 32 percent; EazzyPay (an interoperable payment system) by 171 percent.
According to a report by the Communications Authority of Kenya, Equitel has in addition taken up 23 percent of the mobile money transfer market share.
Equitel is Equity Bank’s mobile platform that uses thin SIM technology to give users access to banking services ranging from sending, receiving and withdrawing money; receiving Diaspora remittances; and loans, insurance, investments, internet banking and cross-border money transfers through the mobile phone.
Launched in 2015, Equitel also provides voice, data and SMS telecommunication services.
Moody’s expects that Equity Bank’s profitability metrics will remain strong, supported by its low-cost funding, an increasing proportion of non-interest income and an efficient cost structure with the extensive use of digital and alternative distribution channels.
Dr. Mwangi added that the Bank continues to protect itself against slow business volumes by focusing on high margin plays and cutting on operational and funding costs.
Despite the recently introduced law capping interest rates in the Kenyan banking system, Equity Bank experienced a strong deposit growth over the past 15 months and lower loan balances, its liquidity ratios improving significantly as of March 2017, with liquid assets at a strong 39 percent of total banking assets and net loans at a fairly low 72 percent of customer deposits.