Co-op Bank net profit jumps 53pc to Sh16.5b

 

Co-op Bank’s CEO Gideon Muriuki [File, Standard]

Co-operative Bank of Kenya's profit has jumped by more than half to Sh16.5 billion, helped by increased income and reduced expenses.

The net profit for the year to December 2021 was a 53 per cent increase from the Sh10.8 billion reported in 2020.

The earnings raced past the pre-pandemic profit of Sh14.3 billion in 2019, signaling that the lender has joined its peers in overcoming the disruptive virus.

“This is the best performance ever by the bank, and is in line with the group’s strategic focus on sustainable growth and transformation,” said Co-op Bank Group Chief Executive Mr Gideon Muriuki.

The lender’s net interest income grew 12 per cent to Sh41 billion on the back of the loan book rising eight per cent to Sh310.2 billion.

Non-interest income also grew by 11 per cent to Sh19.4 billion, to take the total operating income for the year ended December 2021 to Sh60.4 billion.

The board has recommended payment of Sh1 per share as dividend, amounting to Sh5.86 billion, being the same as for the previous year.

Co-op Bank was among the few lenders that maintained the same dividend despite the Covid-19 disruptions that saw banks such as KCB, Equity and Absa either cut or freeze payments to preserve cash.

The lender has set mid-June as the date of paying the dividends, which will see top shareholder—Co-op Holdings Co-operative Society— receive Sh3.79 billion on its 64.56 per cent stake.

Operating expenses for the year fell from Sh39.4 billion to Sh38.1 billion on account of reduced provisioning for loan defaults.

Loan loss provisioning dropped from Sh8.1 billion to Sh7.9 billion in line with the improving economic conditions for most borrowers.

“The group prudentially provided Sh7.9 billion in loan loss provisions compared to Sh8.1 billion provided in 2020, indicating improving quality of our asset book as businesses and households continue to recover from the impact of Covid-19 pandemic,” said Mr Muriuki.

Co-op Consultancy & Bancassurance intermediary posted a pretax profit of Sh803.9 million while that of Co-op Trust Investment Services was Sh140.4 million as funds under management rose 48.4 per cent to Sh189.2 billion.

Kingdom Bank, which is 90 per cent owned by Co-op, contributed a pretax profit of Sh512.4 million, four times higher than the Sh124.2 million reported in 2020.

Co-operative Bank of South Sudan, where the group owns 51 per cent stake, returned a loss of Sh421.7 million on the back of hyperinflation in South Sudan.

The group's total assets grew to Sh579.8 billion, marking an eight per cent growth from Sh536.9 billion as customer deposits grew at the same pace to hit Sh407.7 billion.

Co-op’s investment in government securities grew 14 per cent to Sh184.1 billion, handing it an income of Sh18.7 billion.

The lender said its Mco-op Cash mobile wallet contributed to the growth of non-funded income with 5.3 million customers registered and loans averaging Sh6 billion per month.

“We shall, riding on the unique synergies in the over 15 million-member co-operative movement continue to pursue strategic initiatives that focus on resilience and growth in the various sectors as the economy continues to recover,” said Mr Muriuki on the outlook.

Global rating agency Moody’s said in a recent analysis that the worst of Covid-linked loan defaults is over for Kenya’s banking sector, and expects improved repayments this year.