Co-operative Bank net profit rises 12pc to Sh14.3 billion

Co-operative Bank Group’s #ticker:COOP net profit grew 12.4 percent to Sh14.3 billion last year, lifted by strong growth in non-interest income.

Total non-interest income, mainly from fees and commissions on loans and advances, increased by 33 percent from Sh12.8 billion to Sh17.3 billion, keeping it in growth momentum with its tier I peers like KCB Group #ticker:KCB.

Co-op CEO Gideon Muriuki said its mobile wallet dubbed M-Co-op cash was pivotal in the growth of non-funded income as registered customers hit 4.8 million, helping it disburse loans valued at over Sh43.1 billion as at end of December 2019.

“The group has continued with a strategy for continued deepening and dominance in our domain market segment leveraging on our successful penetration of the micro, medium and small enterprises (MSMEs) and the Saccos, while reviewing opportunities to grow alternative income streams,” said Mr Muriuki.

The growth in its bottom-line was further supported by 1.4 percent growth in total interest income to Sh43.64 billion even as loan book expanded by 8.7 percent to Sh266.71 billion.

Interest income from government securities was up 16 percent to Sh11.35 billion as investment in government paper grew by 46.8 percent to Sh117.8 billion.

Interest expense rose marginally by Sh96 million to Sh12.34 billion. This was despite an 8.6 percent growth in deposits to Sh332.82 billion indicating higher demand deposits.

Co-op’s South Sudan joint venture in which it owns 51 percent stake made a before-tax profit of Sh240.6 million.

This performance, however, translated to a monetary loss of Sh344.7 million attributable to hyperinflation accounting occasioned by currency devaluation of the South Sudanese pound.

Mr Muriuki expects the acquisition of Jamii Bora Bank, which has over 350,000 customers in 17 branches and asset base of Sh12.5 billion, to support future growth.

“The acquisition offers Co-op Bank the opportunity to cross-sell and deepen product offering to the enhanced customer base, and create a niche bank to offer specialised credit offerings that include MSME banking, microfinance, youth and women banking, asset finance and leasing,” said Mr Muriuki.

Co-op Bank’s board of directors on March 11 approved talks to acquire 100 percent stake in the lower tier lender.

In the year under review, operating expenses grew eight percent to Sh27.8 billion on account higher provisioning for non-performing loans (NPLs).

The provisions jumped 38 percent to Sh2.5 billion even as gross NPLs rose 7.3 percent to Sh31.6 billion.

The Nairobi Securities Exchange #ticker:NSE listed lender said over 70,000 customers have taken up its MSMEs loan packages launched in 2018 and has so far disbursed over half (Sh8.05 billion) of Sh15.2 billion earmarked for the program.

The board has recommended dividends of  Sh1 per share, amounting to Sh5.86 billion. The payout will be the same as that of 2018.