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UPDATE 1-Equity Group 2017 pretax profit up 8 pct

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NAIROBI, March 22 (Reuters) - Kenya's Equity Group Holdings said on Thursday its pretax profit rose 8 percent to 26.88 billion shillings ($266.14 million) in 2017, weathering a prolonged election period and the effects of interest rate caps.

"It was a heavy election year and that took a lot of wind from the sails," James Mwangi, chief executive officer, told an investor briefing.

In 2016, Equity's pretax profit grew 4 percent when compared with a year earlier.

Equity, which also operates in Uganda, Tanzania, Rwanda, South Sudan and the Democratic Republic of the Congo, said its net interest income fell to 37.57 billion shillings in 2017 from 41.81 billion shillings in 2016, and it recommended the payment of a first and final dividend of 2 shillings per share.

The bank said the contribution of its subsidiaries outside Kenya to after-tax profit rose to 14 percent from 7 percent a year earlier.

It said non-funded income rose by close to a quarter to 27.6 billion shillings from 22.2 billion shillings, helped by increased foreign exchange and fixed income trading, and total assets rose to 524.5 billion shillings.

($1 = 101.0000 Kenyan shillings) (Reporting by George Obulutsa; Editing by Clement Uwiringiyimana and Mark Potter)