UPDATE 2-Kenya's Equity Bank expects rise in regional profits in 2016

* Group’s 2015 pretax profit up 7 pct

* South Sudan’s performance hit by devaluation

* Sees subsidiaries’ contribution to profit more than doubling (Adds outlook)

NAIROBI, March 8 (Reuters) - Kenya’s Equity Bank expects its regional subsidiaries to more than double their contribution to group profit this year as lending through its mobile banking business continues to grow, it said on Tuesday after posting a 7 percent rise in profits.

The bank said its pretax profit rose to 24 billion shillings ($237 million) from 22.4 billion shillings a year earlier, helped by a near 17 percent rise in net interest income.

Equity, which also operates in Uganda, Tanzania, South Sudan, Rwanda and Democratic Republic of Congo, said these subsidiaries contributed 23 percent of total assets, 23 percent of total deposits, 17 percent of its loan book and 6 percent of the group’s profits.

“We want to make Tanzania, Uganda, Rwanda, Uganda and Democratic Republic of Congo to contribute at least 30 percent of the assets ... and hopefully contribute 15 percent of the profitability,” Chief Executive Officer James Mwangi told an investor briefing.

Mwangi said 2015 had been a difficult year due to a depreciation in regional currencies against the dollar, especially in conflict-stricken South Sudan.

“Last year was one of the most turbulent in terms of macroeconomic environment. We saw significant devaluation of the South Sudan pound, where the currency was devalued by 84 percent,” he said.

“We also saw in the fourth quarter, particularly in Kenya, significant interest rate volatility,” he said.

The yield on Kenya’s 91-day, 182-day and 364-day Treasury bills surged above 20 percent at the start of the fourth quarter, before sliding below 13 percent by the end of the year.

The bank, the biggest in Kenya by number of depositors, said profits rose due to a jump in net interest income to 34.1 billion shillings from 29.2 billion shillings last time.

Its loan book expanded to 269.9 billion shillings from 214.2 billion shillings while the ratio of non-performing loans to total loans fell to 3.3 percent from 4.2 percent in 2014.

Equity said 78 percent of the group’s loans were made through its mobile banking service, with 72 percent of lending going to small and medium businesses.

“We see the future to be driven by the digital bank, not the bricks and mortar,” Mwangi said.

It said total assets rose to 428.1 billion shillings from 344.6 billion shillings, while customer deposits rose to 302.2 billion shillings from 245.6 billion shillings. ($1=101.4500 Kenyan shillings) (Reporting by George Obulutsa; editing by Edith Honan, Greg Mahlich)