Co-operative Bank of Kenya has posted a seven percent growth in net profit to Sh12.99 billion in the half year ended June 2024 on increased interest and non-interest income.
The lender’s net earnings grew from Sh12.14 billion posted in a similar period last year. This was on the back of net interest income growing by 10.7 percent to Sh23.9 billion and non-interest income rising by 11.2 percent to hit Sh15.4 billion.
“The strong performance by the bank is in line with the group’s strategic focus on sustainable growth, resilience, and agility delivering a return on equity of 22.1 percent,” Co-op Bank Managing Director Gideon Muriuki said.
Co-op Bank’s operating expenses for the six months rose by 11 percent to Sh21.3 billion from Sh19 billion on increased provisioning for loan losses and more spending on paying staff.
The provision for loan defaults rose by 4.9 percent to Sh3 billion while staff costs went up by 14.8 percent to Sh9.1 billion. The rise in staff cost was on the back of pay rises and the hiring of additional staff as the lender expanded its branch network.
“The bank continues to invest in a competitive team set to serve at existing functions at the same time tap new growth opportunities across all areas of the business,” Mr Muriuki said.
During the review period, Co-op’s staff size grew by 317 employees to close June at 5,426, even as the physical branches increased by eight to hit 199.
Co-op for instance opened branches at Imaara Mall in Nairobi, Ugunja in Siaya, and Luanda in Vihiga. The lender also added one branch in Meru under its subsidiary, Kingdom Bank, as its South Sudan subsidiary also added another. Co-op Bank plans to close 2024 with an additional 15 branches.
Kingdom Bank, which is 90 percent owned by Co-op Bank, saw its net profit retreat to Sh444.9 million from Sh522 million due to a higher tax liability. Pre-tax earnings had grown 21.8 percent to Sh635.5 million.
Co-op Consultancy & Bancassurance Intermediary Limited posted a pre-tax profit of Sh682.7 million while Co-operative Bank of South Sudan returned a pre-tax profit of Sh264.3 million.
Co-op Trust Investment Services Limited contributed Sh142.7 million in pre-tax profit as the subsidiary’s funds under management grew by 17 percent to close the period at Sh231.3 billion.
Co-op Bank’s asset base grow 7.8 percent to Sh716.9 billion over the six months while customer deposits increased by 9.4 percent to Sh507.4 billion, being the first time to cross the Sh500 billion mark.
The Nairobi Securities Exchange-listed lender was on Monday added to the Morgan Stanley Capital International (MSCI) frontier markets index, in a move that will increase the stocks’ visibility to global investors. MSCI is an international firm that provides investment data and analytics services to investors.
