The Co-operative Bank of Kenya recorded a 5.2% growth in its profit after tax to Ksh6.1 billion in first quarter of 2023, from Ksh5.8 billion the previous year, boosted by rising interest and non-interest incomes including commissions and fees. While non-interest income grew by 10.8% to 7.1 billion, interest income grew by 3.9% to Ksh10.8 billion.
Profit Before Tax grew to Ksh8.15 billion during the period, representing a 4.67% growth compared to Ksh.7.78 billion recorded in 2022, Co-op Bank CEO, Mr Gideon Muriuki. “The strong performance is in line with the group’s strategic focus on sustainable growth, resilience, and agility,” he said.
Operating expenses went up by 8.8% from Ksh9 billion to Ksh9.8 billion. After KCB and Equity Bank, Co-op Bank is the third-largest tier-1 financial institution in the country. It mostly lends to Saccos, who form part of its biggest owners.
Co-op Bank saw customer loans jump 11% to Ksh360.1 billion up from a growth of 8% in a similar period last year. Increased private sector loans saw the bank earn Ksh10 billion in interest income up from Ksh8.9 billion last year. Co-op retained marginal growth in its income from trading government securities earning Ksh5.1 billion up from Ksh4.9 billion last year.
Overall, the bank made an operating income of Ksh17.8 billion, one billion more than last year against Ksh791 million rise in expenditure to Ksh9.8 billion after the lender retained its loan loss provision costs.
Despite a rise in gross non-performing loans to Ksh55.6 billion, Coop increased coverage levels on potential defaults to a high of 72% from 69% in 2021 with a Ksh1.5 billion allocation in provisions this quarter.
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Keeping the cost of bad loans low has been crucial in bringing down the lenders cost to just 46 shillings of every one hundred earned. “The group reports considerable efficiency gains from the various initiatives to record a Cost-to-Income Ratio of 46.3 percent in Q12023, a remarkable improvement from 59 percent in FY2014 when we began our Growth and Efficiency journey,” Dr Muriuki said.
The Group has registered sustained growth in total assets to Ksh631.1 billion, a 5.7% growth from Ksh597.0 billion even as customer deposits grew to Ksh419.8 billion, a 2.2% increase from Ksh410.8 billion.
The bank has integrated customer experience through their new omnichannel interfaces connecting online banking through personal computers, mobile phones and USSD availing our services to all customers through their preferred channel yet retain the same experience from wherever they are, driving uptake of digital channels.
Co-op says 91% of all customer transactions to alternative delivery channels, a 24-hour contact centre, 543 ATMs, mobile and internet banking and over 17,000 network of Co-op kwa Jirani agents, offer customers convenience while cutting operational costs.
Despite this huge push online, Co-op has a growing branch network strategically at 187 Branches (4 in South Sudan).
Co-op opened three new branches (Kenol Makuyu, Hindi and Bamburi) in 2023, whereas 5 Branches (Kabarnet, Iten, Kasarani, Kamakis and Chwele) were opened last year.