Kampala: According to latest Banker rankings, Equity Bank has emerged with a balance sheet size worth Kshs.673.7billion at the end of 2019, ranked number seven among the top 100 banks in Africa in 2020. The revelation has been unveiled by Banker, a global economic and financial intelligence organization that monitors the performance of the financial sector and has built a reputation for objective and incisive reporting.
According to the banker’s top 100 African banks ranking for 2020, Equity got a score of 5.82 in the overall category of the best performing banks.
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, Managing Director and CEO Equity bank said, the enhanced efficiency and cost optimization saw the cost-income ratio improving to 51% from 52.4% in 2018 adding that the group has maintained its yield on interest-earning assets at 11.2% despite the challenge of interest capping and the declining yield curve.
“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,” Mwangi added.
On financial soundness, Equity ranked number five on the backdrop of an agile balance sheet with the 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 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.
This year marks the 50th anniversary of The Banker’s Top 1000 ranking. The first ranking in 1970 contained 300 banks based on assets. A table of the Top 10 (see Table 5) is headed by Bank of America along with six other US banks. The three European banks are the UK’s Barclays and National Westminster (now part of Royal Bank of Scotland) and Italy’s Banca Nazionale del Lavoro now part of France’s BNP Paribas.
In 1970 Bank of America topped the ranking with $25 billion in assets. Today’s leader Industrial and Commercial Bank of China (ICBC) has assets of $4.3 trillion which is 172 times larger. Bank of America which placed sixth in the 2020 ranking currently has assets of $2.4 trillion, making it 96 times larger than 50 years ago.
Over the same half-century, the world economy has only grown 25 times showing how the expansion of the banking industry has outpaced economic growth.