Cooperative Bank has reported an 11.4 per cent rise in net profit to Ksh12.7 billion (US$125.9 million) for the year ended December 2018, as the lender recorded higher interest income.
This is up from Ksh11.4 billion the bank reported in the year 2017. The tier one bank which reduced its loan loss provision to Ksh1.84 billion has continued to post strong results, despite the tough business environment in the sector which has been occasioned by among others, the capping of interest rates.
The Nairobi Securities Exchange (NSE) listed lender saw its customer deposits swell 6.5 per cent to close the year at Ksh306.1 billion, up from Ksh287.4 billion.
The bank’s loan book however shrunk marginally to Ksh245.4 billion from Ksh253.9 billion, a 3.3 per cent difference.
This has however not come as a surprise as banks have shifted focus to government securities as opposed to lending to individuals, who have been considered ‘high risk borrowers’ under the interest rate cap regime.
Despite the drop in loans and advances to customers, interest income from loans closed at Ksh32.9 billion up from Ksh31.9 billion.
Interest earned from government securities equally grew to Ksh9.8 billion up from Ksh8.2 billion while that from deposits and placements with banking institutions increased to Ksh288.9 million, up from Ksh217.6 million.
The strong performance saw Coop’s total interest income grow 6.4 per cent to Ksh43 billion up from Ksh40.4 billion.
Its holdings of government securities increased 16 per cent (Ksh11 billion) to Ksh80.24 billion.
During the financial year, the bank grew its assets to a total Ksh413.4 billion, a 6.8 per cent jump from Ksh386.9 billion it had the previous year.
Total expenses was however on the rise closing at Ksh43.7 billion compared to Ksh41.6 billion a year earlier, the banks financials show.
This was as a result of among others, an increase in staff costs which rose to Ksh11.4 billion from Ksh10.1 billion in 2017.
According to its financial statement signed by chairman John Murugu and Group Managing Director and CEO Gideon Muriuki , the directors have approved the payment of a first and final dividend for the year Sh1 per share, compared with the 80 cents paid out in 2017.