Even as the price of Equity Bank shares on the Nairobi Stock Exchange appears to be recovering over the last few days, somebody is forwarding nasty emails warning Kenyans to stay away from the bank.
The reason I find this interesting is that I have carefully studied the growth of Equity right from the time it was launched as a building society in the Moi days. I correctly predicting that they would one day be very big, because they did the opposite of what other banks were doing at the time and targeted the ordinary mwananchi. As you read this, the bank has got over one million account-holders, a record in Kenya.
The way to analyze a company is to look at how it makes its' money. As a rule I will never invest in a business that I do not understand. Equity's major profit generator is small loans to ordinary folks. If you understand the principal of compounded interest you will quickly realize just how wildly profitable this activity can be.
So the foundations of Equity are basically sound...