NAIROBI, March 22 (Reuters) – Equity Group EQTY.NR, Kenya’s biggest lender by assets, expects to boost its loan book this year as it shifts from government securities, its chief executive said on Tuesday.

The lender, which also operates in Uganda, Tanzania, Rwanda, Burundi, South Sudan and Democratic Republic of Congo, more than doubled its pretax profit last year as income rose and bad debts dropped.

“There is a huge opportunity of re-allocating (assets),” James Mwangi, the group’s CEO, told an investor briefing.

Equity had parked 394 billion shillings ($3.45 billion) in government securities at the end of last year, double the amount in the previous year, and it will shift some of that to higher yielding customer loans, he said.

Kenya’s central bank approved Equity’s interest rate pricing plan, Mwangi said, making the shift to increased customer lending possible.

The East African nation removed a cap on lending rates in late 2019 and the central bank is engaging all lenders with a view to approve their individual pricing mechanisms.

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Equity, which is the only lender to have its plan approved so far, will charge customers interest rates of 13-18.5%.

“We can now accommodate all borrowers,” Mwangi said, referring to those who had been pushed out of credit by the rate cap.

Total costs at the group slid last year, partly due to customers shifting to digital channels, Mwangi said, forecasting expenses would drop further this year.

The group reported a jump in its interest income for the period, as well as income from transactions.

It slashed its provisions for bad debts to 5.84 billion shillings from 26.63 billion shillings in the prior year, boosting pretax profit 134% to 51.9 billion shillings.

Equity recommended a payout of 3.00 shillings per share, resuming a dividend payment for the first time since 2018. It did not pay a dividend for 2019 and 2020 to build up capital.

($1 = 114.3000 Kenyan shillings)

(Reporting by Duncan Miriri and George ObulutsaEditing by Mark Potter)