A bank's core business is buying and selling money. Today you'll learn the one number that shows whether that business is working: net interest income.
In an ordinary company's income statement, you subtract the cost of making a product from what customers paid for it, and you're left with a gross profit. A bank doesn't sell products — it borrows money (from depositors) at one rate and lends it out (to borrowers) at a higher rate. The gap between those two rates, multiplied by how much money is moving, is the bank's version of gross profit. It's called net interest income, and it's built from three lines:
Below is Equity Group's real, audited income statement extract for the year ended 31 December 2024, showing exactly this calculation.
| Shs'000 | FY2024 | FY2023 |
|---|---|---|
| Total interest income | 170,285,001 | 155,992,438 |
| Total interest expenses | (61,575,230) | (51,190,823) |
| Net interest income | 108,709,771 | 104,801,615 |
Source: Equity Group Holdings PLC Audited Financial Statements for the Year Ended 31 December 2024 (audited by PwC; consolidated Group figures, Shs'000).
Notice the units: Equity Group reports in Shs'000 (thousands), not KShs millions like Safaricom. So 170,285,001 here means about KShs 170.3 billion — always check a table's unit label before comparing two companies' numbers, or you'll be off by a factor of a thousand.
170,285,001 − 61,575,230 = 108,709,771. That checks out exactly against the reported net interest income figure — a good habit whenever you read a bank's statement, since it confirms you understand what's being subtracted from what.
Net interest income grew only modestly year over year — from 104,801,615 to 108,709,771 (Shs'000), up about 3.7%. That's a much slower pace than the double-digit growth you'll often hear quoted for Equity Group's overall profit. The reason is that a bank also earns money in ways that have nothing to do with lending: transaction fees, foreign exchange trading, insurance, and other services. That's called non-interest income, and it sits alongside net interest income to form the bank's total operating income — but that's a topic for the next lesson on Equity Group's balance sheet. For today, the point to hold onto is narrower: net interest income tells you whether the bank's core lending "spread" is healthy, on its own, before anything else is added in.
A bank with huge interest income and huge interest expense that mostly cancel out is not necessarily doing well — what matters is the gap between them, and whether that gap is growing. If interest expense ever grew faster than interest income (for example, if the bank had to pay depositors much higher rates to keep their money), net interest income could shrink even while both the income and expense lines individually looked bigger than the year before. This is the bank equivalent of the "revenue up, profit down" red flag from Lesson 1 — always check the net figure, not just the size of the gross lines either side of it.
Next lesson, we'll look at Equity Group's balance sheet — how customer deposits fund the loans the bank makes, and what that relationship tells you about a bank's stability.
Primary source for this lesson's numbers: Equity Group Holdings PLC Audited Financial Statements for the Year Ended 31 December 2024.
Something unclear, or want to dig into a line item we skipped (like "what counts as non-interest income")? Ask your teacher — that's what these sessions are for.