Co-op bank posts 12pc drop in net profit on lay-off costs
A customer receives service at a Co-op Bank banking hall. The lender spent Sh1.3 billion to lay off 160 senior staff members last year in an exercise that it hoped would save it Sh500 million annually. PHOTO | FILE
What you need to know:
The lender's management are recommending retaining their dividend pay-out at Sh0.50 per share.
Co-operative bank has announced a 12 per cent drop in after tax profits attributable to a one-off staff retrenchment expense and higher taxation.
The lender reported a profit after tax of Sh8 billion for the year ended December 2014 compared to Sh9.1 billion recorded in the previous year.
Gideon Muriuki, Co-op’s chief executive, said the bank spent Sh1.3 billion to lay off 160 senior staff members last year in an exercise that it hoped would save it Sh500 million annually.
Co-op started paying a 30 per cent corporate tax last year, compare to previous 20 per cent, following expiry of a five year tax holiday it was enjoying after listing through a public offering in 2008.
The higher taxation saw it pay Sh3.4 billion to Kenya Revenue Authority in the period, up from Sh2 billion in 2013. The bank’s loan book expanded by Sh42 billion to Sh179 billion while its deposit base rose by 24 per cent to Sh217 billion.
Co-op’s interest expenses increased 36.5 per cent to Sh8 billion with Sh6 billion being for customer savings. Its interest income grew at a slower pace, 19.6 per cent, with loans earning it Sh24.7 billion.
Co-op’s management are recommending retaining their dividend pay-out at Sh0.50 per share. The company’s share has gained 10.5 per cent in the last three months at the Nairobi Securities Exchange.
