NAIROBI, KENYA,MAR 15 — The Co-operative Bank of Kenya net profit for the year ended December 31, 2017 fell 10.2 per cent, the bank has announced, joining other tier 1 lenders which have reported marginal growth amidst profit falls.
The Nairobi Securities Exchange listed lender’s profit after tax dropped to Ksh11.4 billion last year from Ksh12.7 billion recorded the previous year, in the wake of an interest rate capping regime that has denied banks in Kenya maximum profit on customer loans.
This comes even as the bank’s loan book grew 7.2 per cent to close the year at Ksh253.9 billion, up from Ksh236.9 billion the previous year.
During the year, Co-op bank’s total income interest fell 4.5 per cent to Ksh40.4 billion from Ksh42.3 billion recorded the previous year.
Interest income from government securities, which banks prefer over riskier borrowers under the interest rate cap law, fell 3.5 per cent. The lender recorded a total Ksh8.2 billion a drop from Ksh8.5 billion netted in 2016.
Interest income from loans and advances also fell 4.5 per cent to close at Ksh31.9 billion, compared to Ksh33.4 billion the bank reported a year earlier.
In its full year audited group financial results released on Thursday, the lender reported an insider loan aggregate of Ksh9.5 billion, which is a slight growth from Ksh9 billion it had in 2016.
The bank’s continued investment in agency and mobile banking platforms paid off in the year, where total customer deposits grew 10.5 per cent to close at a total Ksh287.4 billion, up from Ksh260.2 billion the previous year.
The lender grew its total assets to Ksh386.9 billion from Ksh351.9 billion, its financials signed by group managing director Gideon Muriuki and Chairman John Murugu reflect.
Muriuki has termed the performance as “commendable” against the backdrop of a challenging operating environment where banks had to struggle with “interest rate caps and lower economic growth in an election year.”
Coop bank joins tier one lender Barclays Bank of Kenya in reporting a profit fall last year. READ:.https://www.exchange.co.tz/barclays-profit-drop-6-2-amid-name-change-absa-group-limited/
Barclays, whose parent company-Barclays Africa Group has proposed to change its name to Absa Group Limited, recorded a 6.2 per cent drop in profit to close the year at Ksh6.93 billion. This was down from Ksh7.39 billion net profit recorded in 2016.
Another top bank is KCB Group which last week reported a flat profit after tax performance.
The bank, which is Kenya’s largest lender by asset, recorded KSh19.7 billion in after-tax profit for the period ended December 31, 2017.
“We shrugged off quite a testing business environment across markets. The full effect of the law capping interest rate in Kenya marked by a slow business environment on account of the general election negatively hit businesses and the economy at large,” KCB Group Chairman Ngeny Biwott told an investor briefing in Nairobi.