Kenya's Equity Bank to focus on developing mobile banking business

Kenya's Equity Bank aims to double profits from its foreign markets in east Africa and increase users of its mobile banking service to boost earnings, its chief executive said on Tuesday.

The lender, which has the highest number of depositors in east Africa, posted a 12 percent jump in pretax profit to 12.1 billion shillings ($120 million) in the first half, thanks to growth in commissions, foreign exchange trading and the contribution of its foreign subsidiaries in the region.

"What we will see in the next half is to try to ensure the subsidiaries double their performance by the end of the year," James Mwangi said at an investor briefing. He did not specify whether he meant a doubling of profits compared with the last year or the first half of this year.

Equity's operations in Uganda, Tanzania, Rwanda and South Sudan, posted a combined increase in pretax profit of 41 percent to 920 million shillings ($9.1 million).

Total operating costs surged 22 percent to 14.22 billion shillings, outpacing an 18 percent growth in total income, due to investments in its mobile banking infrastructure. The service, known as Equitel, was launched formally last month and has more than 1 million users.

Mwangi said they would also focus on increasing the number of users of the service, which requires them to install a special SIM card on their phones.

"You will find a disproportionate focus on Equitel," he said.

Equity has partnered with telecoms network operator Bharti Airtel's Kenyan unit for the service.

Mobile banking is seen as the future of the industry, with more people accessing financial services on their phones and other portable devices, prompting lenders to partner with telecom firms to offer services.

Equity's shares, which are among the most actively traded on the Nairobi bourse, jumped as much as 4 percent to 39.25 shillings after the results.

Non-funded income, consisting of activities other than lending, jumped 10 percent to 10.81 billion shillings, with foreign exchange income surging 76 percent.

The bank, which wants to increase operations to 10 more African nations by 2024, expects its acquisition of ProCredit bank in the Democratic Republic of Congo to be completed by next month, the chief executive said.

It bought a 79 percent stake in ProCredit, the seventh biggest lender in the DRC, back in May.

Its ambition of expanding into the vast but largely untapped Ethiopian market continue to be held back by the country's economic policy, Mwangi said.

"We are craving for Ethiopia but it is still a closed economy," he said. ($1 = 100.9000 Kenyan shillings) .

SOURCE:REUTERS