Companies

Co-op loses Sh1.3bn on Covid relief measures

COOPBank

A Co-op Bank branch in Nairobi. FILE PHOTO | NMG

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Summary

  • The lender discloses in its latest annual report that the lost income – equivalent to 12.5 percent of its Sh10.8 billion net profit in the review period— came in the form of fee waivers on mobile money transactions and loan restructure.
  • The Central Bank of Kenya (CBK) announced a series of actions between March and April last year, most of them aimed at boosting uptake of cashless transactions and offering financial relief to customers hit by the Covid-19 pandemic.
  • Banks and telecommunications firms bore the brunt of the regulator’s intervention, losing billions of shillings from the fee waivers.

Emergency financial relief measures brought by the Covid-19 pandemic saw Co-op Bank #ticker:COOP lose Sh1.3 billion worth of income in the year ended December.

The lender discloses in its latest annual report that the lost income – equivalent to 12.5 percent of its Sh10.8 billion net profit in the review period— came in the form of fee waivers on mobile money transactions and loan restructure.

The Central Bank of Kenya (CBK) announced a series of actions between March and April last year, most of them aimed at boosting uptake of cashless transactions and offering financial relief to customers hit by the Covid-19 pandemic.

Banks and telecommunications firms bore the brunt of the regulator’s intervention, losing billions of shillings from the fee waivers.

Co-op Bank, for instance, says it lost Sh900 million from the scrapping of fees on cash transfers between mobile money platforms and bank accounts.

The CBK allowed the bank to resume charges on its mobile money wallet Mcoop Cash effective April 1, citing the need to ensure continued service availability to the co-operative sector whose main banker is Co-op Bank.

The lender, however, reduced its charges significantly in the agreement with the regulator. The fees on the platform, which has more than five million customers, now range from zero to Sh50 depending on the transaction.

“A recurring concern has been that the viability of these services may be adversely affected in the current price regime, given the inability to cover the underlying costs,” CBK said in an earlier statement.

“This is a significant risk for saccos and their extensive membership due to the lack of other alternatives to connect to the mobile money ecosystem.”