NAIROBI, KENYA, AUGUST 16 — Co-operative Bank of Kenya has posted a 7.6 per cent rise in its net profit for the six months to June, buoyed by increased interest income at the back of steadily improving operational efficiency.
The Nairobi Securities Exchange listed lender’s half year profit stood at Ksh7.1 billion up from Ksh6.6 billion in a similar period last year.
The gains were propelled by among others, investments in government securities and interest income from its loans and advances to customers, as the lender continues to implement its “Soaring Eagle” Transformation Agenda.
Co-op Bank’s total interest income grew 7.8 per cent to Ksh20.8 billion from Ksh19.3 billion last year.
Interest income from loans increased from Ksh15.3 billion to Ksh16.1 billion while that from government securities (lending to the government) grew to Ksh4.5 billion from Ksh3.9 billion.
This came as the bank’s investment in government securities rose to Ksh80.2 billion in the six months, up from Ksh70.5 billion in a corresponding period last year.
The bank’s loan book however remained flat at Ksh251.1 billion reflecting a negative impact the interest rate capping has had in the country’s credit market. The bank advanced Ksh252.6 billion to customers in a similar period last year.
Gross Non-Performing Loans (NPLs) during the period more than doubled to Ksh28.2 billion from Ksh12.2 billion, a 131.1 per cent rise.
During the period, the bank extended Ksh9.9 billion on the inside, an increase from Ksh9.3 billion where employees took the biggest share of Ksh7.8 billion while directors, shareholders and associates took Ksh2.1 billion.
This is up from Ksh7.5 billion and Ksh1.8 billion respectively.
Co-op bank’s loan loss provision in the six months dropped to 1.1 billion from 1.5 billion in a corresponding period last year.
The profit increase came despite a tough business environment which saw the lender’s total operating expenses increase to Ksh11.9 billion from Ksh11.3 billion. Staff cost increased to Ksh5.3 billion from Ksh4.7 billion.
The bank however managed to increase its total assets by 3.9 per cent to Ksh398.4 billion from Ksh383.3 billion.
Group Managing Director and CEO Gideon Muriuki said the bank notes the operating environment is on a recovery path from challenges seen in 2017, when the country had a prolonged electioneering period and the interest rate cap law.
“This is a commendable performance in an operating environment that is gradually recovering from headwinds that businesses had to contend with in the aftermath of the 2017 elections,” Muriuki said.
The bank’s “Soaring Eagle” Transformation Agenda has remained key in its growth. It focuses on improved operational efficiency, cost management and innovative delivery systems.
Co-operative Bank remains among top lenders in the country and the region. During the Banker Africa-East Africa Award 2018, Co-op was declared Best Retail Bank in Kenya, Best SME Bank in Kenya and Best Investment Institution in Kenya.