The bank says net profit for quarter one stood at Sh3.58 billion compared with Sh3.59 billion in a similar period last year.
Rising employee costs and provisions for bad debts are into the banks income from loans and fees like ATM transactions.
Co-Op Group Managing Director Dr Gideon Muriuki said operating expenses grew by 20.6 per cent on the back of loan loss provision and staff expenses.
Cooperative Bank of Kenya #ticker:COOP has announced flat profits for the three months to Match as rising workers’ pay and costs linked to loan defaults ate into the lender’s earnings.
The bank said net profit for quarter one stood at Sh3.58 billion compared to Sh3.59 billion in a similar period last year.
Rising employee costs and provisions for bad debts are into the bank’s income from loans and fees like ATM transactions.
Co-op Group managing director Gideon Muriuki said operating expenses grew by 20.6 per cent on the back of loan loss provision and staff expenses.
Its staff costs rose to Sh3.4 billion from Sh2.7 billion while the loan loss provisions nearly doubled from Sh510 million to Sh900 million.
Banks expect reduced demand for loans in the wake of the coronavirus crisis, which has hit business activity in what will ultimately slow down lenders’ profits.
“With the Covid-19 crisis, the bank has proactively engaged all the customers and reviewed terms for customers requiring an interest moratorium period, those requiring a better structure/longer repayment period and customers requiring additional funding to manage the crisis,” said Mr Muriuki.
The bank has restructured loans worth Sh15 billion for struggling borrowers.
Co-op said it has also managed to move 90 percent of all customer transactions to alternative delivery channels, including mobile and Internet banking as well as agents.
“Key focus on digital banking, with the all-telco M-Coop Cash Mobile Wallet continuing to play a pivotal role in the growth of non-funded income with 5.6 million customers registered and loans worth over Sh16 billion disbursed in quarter 1 2020,” said Mr Muriuki.
Its income from fees jumped to Sh3.76 billion from Sh2.87 billion.
Co-op Bank had offered to fully acquire Jamii Bora Bank in the latest instance of consolidation in the banking industry.
The 55-year old Co-op, which is mainly owned by members of the co-operative movement, is the fourth-largest lender, controlling 9.63 percent of the market. Jamii Bora is the second smallest of Kenya’s 39 lenders.
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