Equity Bank has sent home 200 of its 300 workers in South Sudan following closure of more than half of its branches in the troubled country.
Regional lender Equity Bank has announced a 7 percent drop in its first half net profit as the bank continues to grapple with effects of the interest capping law.
The Kenya-based bank has also frozen lending in the country due to political uncertainty as a protracted civil war brought many businesses in South Sudan to a halt.
Equity, which had thirteen branches in the troubled country, now only operates five with the closures having been announced in May.
During the six month period, Equity Bank’s profit stood at Sh9.4 billion down from Sh10 billion in 2016.
This was revealed at an investor briefing Tuesday morning, as the Group CEO James Mwangi said that equity bank had recorded a 7.4 per cent drop in half-year after-tax profit as interest income took a hit from the rate cap law.
Mr Mwangi said the bank is going to focus on prioritizing stability rather than profitability as it adjusts to the new lending regime as well as raising its investment in government securities from Sh73bn to Sh115 billion
“The banking industry going through a difficult environment. Interest rate caps has had effect on the economy,” he said at the briefing.
The lender’s net profit for the period to June 2017 was at KSh9.33 billion compared to 10.07 billion in a similar period last year.
Net interest income for the top-tier lender fell by 15.5 per cent to KSh17.9 billion from KSh21.2 billion in June 2016.
Equity’s loan book contracted to KSh265 billion in the period under review, compared to KSh269 billion last year.
Non-interest income went up 19.6 per cent to Sh12.9 billion.