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Inside Co-operative Bank’s Profit Machine

Profitability grows to by the billion, driven by strategic focus on sustainable growth, resilience and agility

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Co-op Bank profit before tax for the group reached Ksh24.7 billion for the third quarter of 2023, representing 8.6% growth from Ksh22.7 billion in the same period last year. Profit after tax grew to Ksh18.4 billion from Ksh17.1 billion reported in 2022.

Managing Director and CEO Dr Gideon Muriuki says  the strong performance is in line with the Group’s strategic focus on sustainable growth, resilience, and agility. He said the Group continues to pursue strategic initiatives that focus on resilience and growth in the various economic sectors.

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“This is anchored on a successful universal banking model supported by an innovative digital presence, a wide physical footprint, and the unique synergies in the over 15-million-member co-operative movement that is the largest in Africa.,” Dr Muriuki.

Total Assets grew to Ksh661.3 billion, a 6.3% growth from Ksh622.1 billion in the same period last year. Net loans and advances grew to Ksh378.1 billion, a 12.8% growth from Ksh335.2 billion in 2022, while customer deposits grew to Ksh432.8 billion, a 0.2% increase from Ksh432 billion.

External funds from development partners increased by 56.5% during the period to Ksh65.6 billion from Ksh41.9 billion in 2022, as shareholders’ funds expanded to Ksh108.1 billion, a 7.1% increase from Ksh100.9 billion in 2022. 

Meanwhile, total operating income grew by 2.3% from Ksh52.2 Billion to Ksh53.4 billion. Net interest income grew by 2.5% from Ksh32.0 billion to Ksh32.8 billion. Non-interest income grew by 2.1% from Ksh20.2 billion to Ksh20.6 billion. Operating expenses decreased by 2.1% from Ksh29.6 billion to Ksh29 billion.

“The Group reported excellent efficiency gains from the various initiatives to record a Cost-to-Income Ratio of 46.4% in Q3 2023 from 59% in FY2014 when it began our Growth & Efficiency journey,” Mr Muriuki said.

He said credit management remains a key focus area, with the Group prudentially making provisions of Ksh4.2 billion, which has supported the bank’s Loan Loss Reserve/Coverage level of 69.1%.

Subsidiaries Performance 

Co-op Consultancy & Bancassurance Intermediary Ltd posted a profit before tax of Ksh762.9 million in Q3 2023, riding on strong penetration of Bancassurance business.

Co-operative Bank of South Sudan that is a unique joint venture (JV) partnership with Government of South Sudan (Co-op Bank 51% and GOSS 49%) made a profit before tax of Ksh246.9 Million in Q32023. This performance translated to a profit before tax of Ksh43.5 million after the hyperinflation accounting occasioned by currency devaluation of the South Sudanese pound.

Co-op Trust Investment Services Ltd contributed 154.5 million profit before tax in Q3 2023, a 9.6% growth. The subsidiary has funds under management of Ksh196 billion as at Q3 2023

Kingdom Bank Limited (a niche MSME Bank) earned a profit before tax of Ksh786.6 million in Q3 2023, a remarkable growth of 24.8% from Ksh630.2 Million reported last year.

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BT Reporter
BT Reporterhttp://www.businesstoday.co.ke
editor [at] businesstoday.co.ke
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