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Co-op earns Sh7bn net income in half year

Gideon Muriuki.

Co-operative Bank CEO Gideon Muriuki. PHOTO | NMG

Co-operative Bank’s #ticker:COOP net profit rose 2.3 percent to Sh7.4 billion in the six months ended June as increased loan loss provision offset higher income from lending and transactions.

The lender had made a net profit of Sh7.1 billion in a similar period last year.

Provision for defaults rose by Sh2.2 billion to Sh4.1 billion in the review period, contributing to overall operating expenses expanding by Sh4.1 billion to Sh18.6 billion.

Net interest income grew 18 percent to Sh18.8 billion as the loan book grew 11 percent to Sh302.1 billion.

Non-interest income was up 24 percent to Sh10.3 billion, supported by transactions on the Mco-op Cash mobile wallet which was disbursing loans averaging 5.6 billion monthly.

Chief executive Gideon Muriuki attributed the rise in loan loss provisioning to the need to recognise the economic hardships still facing borrowers in Covid-19 environment.

“The group prudentially increased loan loss provisions to Sh4.2 billion in appreciation of the challenges that businesses and households continue to face due to the economic effects of the ongoing pandemic,” Mr Muriuki said.

Co-op’s move contrasts with that of some of its rivals such as Equity group and Stanbic Holdings which reduced their loan loss provisioning, helping them to post big profit jumps in the half year period.

Mr Muriuki said that customers have resumed payments on most of the Sh49 billion loans that the bank had restructured by end of March 2021 to accommodate those hit by the pandemic.

“The restructured facilities are largely performing as per the realigned agreements. Our customers continue to show resilience therefore improving their repayment as the economy picks up in various sectors,” said Mr Muriuki.

Co-op’s subsidiaries posted improved results, with the 90 percent owned Kingdom Bank returning Sh275 million net profit.

It had booked Sh200.9 million loss in full year to December.

Co-op Consultancy & Insurance Agency returned Sh433.8 million pre-tax profit on increased bancassurance business while that of Co-op Trust Investment Services was Sh47.9 million as funds under management rose by Sh59.1 billion to Sh179.4 billion.