Co-op Bank profit surges 47 per cent in nine months on revenue growth

Co-op Bank’s chief executive Gideon Muriuki. FILE PHOTO | NMG

Co-op Bank reported a 47 per cent growth in net profit in the nine months that ended September, helped by higher interest and non-interest income.

The lender’s net profit stood at Sh17 billion in the review period, up from Sh11.6 billion a year earlier.

“The performance delivers a competitive return on equity of 23 per cent to our shareholders,” said Co-op Bank chief executive Gideon Muriuki in a statement.

“The strong performance by the bank is in line with the group’s strategic focus on sustainable growth, resilience and agility.”

He added that all of the group’s subsidiaries, including the South Sudan operation, were profitable in the review period.

Non-interest income, including fees and commissions from loans and forex trades, increased 28.2 per cent to Sh20.1 billion. Interest income meanwhile rose 10.5 per cent to Sh43.7 billion, partly due to a growth in lending.

The bank’s loan book expanded 9.4 per cent to Sh335.1 billion as investments in government debt securities declined 5.6 per cent to Sh182.3 billion.

Customer deposits rose 2.7 per cent to Sh432 billion, contributing to interest expenses rising 7.2 per cent to Sh11.6 billion.

Total operating expenses increased six per cent to Sh29.6 billion, driven by higher staff costs.

The bank’s cost-to-income ratio however improved to 45.8 per cent from 49.3 per cent.

The ratio is a measure of efficiency for banks, with a lower number depicting better performance.

Co-op Bank said its ratio has come down from a high of 59 per cent in 2014 when it embarked on its growth and efficiency strategy featuring digitisation of services.

“Through our digital channel strategy, the bank has successfully moved 94 per cent of all customer transactions to alternative delivery channels, a 24-hour contact centre, mobile banking, 550 ATMs, Internet banking and a wide network of Co-op Kwa Jirani agents,” said Mr Muriuki.

Banks have automated their services, allowing them to acquire and serve more customers at a small marginal cost.

Co-op Bank reduced its loan loss provision by Sh319.7 million to Sh5.7 billion despite gross defaults increasing by Sh2.3 billion to Sh51.8 billion.

The earnings of Kenyan banks have continued to grow strongly, helped by economic recovery and reduction in loan loss provisions which were pronounced in the initial impact of the Covid-19 pandemic.

While announcing the results, Mr Muriuki announced that the bank has made a contribution of Sh150 million to help Kenyans affected by drought.

“Co-op Bank wishes to join other Kenyans and indeed the global community of goodwill in fully supporting the fundraising appeal initiated by His Excellency the President, with a key contribution of Sh150 million to support relief efforts aimed at assisting families affected by the severe drought ravaging various parts of the country,” he said.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.