Co-operative Bank of Kenya posts Sh9.6b profit in H1

Friday, August 14th, 2020 00:00 | By
CoopBank Group CEO Dr. Gideon Muriuki.

Steve Umidha @SteveUmidha

Co-operative Bank of Kenya yesterday announced Sh7.2 billion profit after tax for the first six months of 2020 in a 3.6 per cent dip in earnings due to Covid-19 knocks.

The bank, the country’s third largest lender by assets, said profits fell from Sh7.5 billion same period last year, even though the bank’s pretax profits registered a growth of Sh.9.6 billion for the period, compared to Sh10.44 billion last year.

“The strong performance is an affirmation of the resilience of the business in view of the most challenging operating environment occasioned by the Covid-19 pandemic that has brought about unprecedented economic and social disruption globally,” said the Group’s chief executive Gideon Muriuki.

The bank’s non-interest funded income retreated by five per cent to Sh8.3 billion from Sh8.8 billion. Net interest income grew by 12 per cent from Sh14.3 billion to Sh15.9 billion.

Loan loss provisioning

Total operating income grew by five per cent to Sh24.2 billion from Sh23 billion with net interest income expanding by 12 per cent to Sh15.9 billion.

During that period, total operating expenses grew by 16 per cent from Sh12.6 billion to Sh14.6 billion due to  higher loan loss provisions – in a period that saw the lender restructure Sh39.2 billion pandemic loans – to cushion customers against the impact of the novel coronavirus.

Loan loss provisioning in the period surged by 57.9 per cent to Sh1.87 billion from Sh1.18 billion the previous year.

Co-op Bank managed to expand its balance sheet in the period as its loan book soared by six per cent to Sh272.2 billion while customer deposits widened by 19 per cent to Sh384.6 billion.

This makes the results the first to fully capture the effects of the Covid-19 pandemic on the lender’s performance which despite the dip registered growth in its customer deposits.

Through its multi-channel strategy, the bank said it successfully moved over 90 per cent of all customer transactions to alternative digital channels to limit direct contact cash – between the bank and customers – in a bid to reduce the spread of the virus.

“Over 92,644 customers have taken up the MSME packages that we rolled out in 2018, and 6950 have been trained on business management and planning.

We have earmarked Sh15.2 billion for MSME lending, with Sh13.2 billion disbursed to date through our E-Credit solution,” said Co-op’s Muriuki.

Co-op bank which also operates in South Sudan, acquired 90 per cent stake in Jamii Bora bank through the subscription of 224,153,154 new class of Ordinary Shares in a deal that will see the bank inject Sh1 Billion and appoint a Board to run the business.

Last week the Central Bank of Kenya approved the acquisition effective August 21.

The acquisition is expected to offer Co-op Bank the opportunity to cross-sell and create a niche bank to offer specialized credit offerings that include MSME Banking, Microfinance, Youth & Women Banking, Asset Finance and Leasing.

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