Equity Bank deposits up 81 per cent to Sh71b

Equity Bank has announced an 81 per cent increase in interest-earning deposits for the third quarter against a similar period last year, in the wake of a law that set the minimum rates payable on customers’ cash.

This could be an indication that bank customers are using their deposits to generate extra income.

The law that was implemented in August requires that banks pay a rate not less than 70 per cent of the base rate published by Central Bank of Kenya, which currently stands at 10 per cent.

Vote of confidence According to numbers released by Equity Bank chief executive James Mwangi yesterday, interest-earning deposits which include ordinary savings and fixed deposits, grew to Sh71.1 billion in the third quarter ending September from Sh39.6 billion last year.

Fixed deposits grew the most at 85 per cent to Sh70.5 billion from Sh38 billion last year.

“This is a trend we have observed in the one month since the interest rates caps became effective,” said Mwangi.

“When the market trend shows that there has been a shift in the markets to government securities as evidenced by the over 300 per cent oversubscription of Treasury bills, the growth in our interestearning deposits is a vote of confidence in the strength of the bank,” he added.

Mwangi was speaking when he released the bank’s financial results for the third quarter, which showed the group’s net profit increased 16.9 per cent to Sh15 billion from Sh12.8 billion in a similar period last year.

Interest income grew 25.9 per cent to Sh39.8 billion from Sh31.6 billion, pushing total operating income up by 15.3 per cent 48.9 billion from Sh42.4 billion.

Mwangi said the phonebased platform Equitel is on course to become the biggest mobile money service in the next three years.

“In just one year after the launch, Equitel has taken 15 per cent market share in mobile transactions. By the end of this year, we have gained another 15 per cent.In three years, we will be the biggest mobile money platform in Kenya,” he said.

Subscribers to Equitel increased by 400,000 to 2.42 million within the period, with most linking the Sim cards to their bank account.

The number of banking transactions conducted through Equitel increased by 198 per cent over the last one year to 313 million while the value of the transactions increased by five times to Sh320 billion.

Four million loans valued at Sh30 billion were disbursed through the mobile banking platform.

“This is the biggest value of loans disbursed in Kenya through a mobile platform,” said Mwangi, adding that loans repayment through the digital channel was 98 per cent.

SOURCE:MEDIAMAX