Business

Co-op Bank nets Sh11.6b profit on higher income

Co-op Bank nets Sh11.6b profit on higher income

Co-operative Bank of Kenya has reported an 18 per cent growth in net profit for the nine months to September, surpassing the 2020 full-year earnings on increased income.

The lender made a profit after tax of Sh11.6 billion in the third quarter compared to Sh9.8 billion in a similar period in 2020.

“The strong performance by the bank exceeds the pre-pandemic performance and is in line with the group’s strategic focus that supports growth, resilience and agility,” said Co-op Bank Chief Executive Gideon Muriuki.

The results come on the backdrop of a recovering economy that saw Co-op Bank, majority-owned by co-operative societies, grow its revenues by 19.2 per cent to Sh44.4 billion from Sh37.2 billion in the same period last year.

Net interest income grew by more than a fifth to Sh28.7 billion from Sh23.6 billion, as borrowers resumed servicing their loans.

Non-funded income, comprising of fees and commissions, grew by 15.6 per cent to Sh15.7 billion from Sh13.6 billion.

Faster growth in income compensated for increased loan provisions, which pushed up the lender’s expenses by 19.2 per cent to Sh28 billion.

Loan-loss provisions, or money set aside as insurance against possible loan defaults, increased by 50 per cent to Sh6 billion.

The bank said credit management will be a key focus area as the lender seeks a return to its non-performing loans levels before the pandemic.

It has already retained a global consulting firm to craft a credit risk adaptation project dubbed ‘Project Kilele.’

Additionally, the lender will seek to decentralise its loan management to the branches, lending units and relationship management teams to enhance the collection.

Kingdom Bank, formerly Jamii Bora Bank, also made a profit of Sh413 million in the third quarter, continuing a turnaround from a loss of Sh1 billion when it was acquired by Co-op in August 2020.

This has already surpassed the Sh300 million net profit that the bank’s board had projected for the full year ending December 2021.

The third-largest bank in asset size, Co-op saw its total assets grow by Sh82 billion to Sh592.9 billion compared to Sh510.9 billion in the same period last year.

Though it did not announce an interim dividend, the bank is among the few lenders that shared their profits with shareholders last year in a period when most lenders did not.

This led to Mr Muriuki being named Best Bank CEO of Africa even as the bank was feted for paying dividends and retaining workers despite the adverse effects of the Covid-19 pandemic.