RELIEF

Co-op Bank restructures Sh39.2 billion debt to cushion customers

During the period under review, the bank’s income grew to Sh24.2 billion

In Summary
  • The bank's profits dropped marginally by 3.6% to hit Sh7.2 billion
  • In Mid-March, the Central Bank of Kenya allowed lenders to offer relief to distressed customers after the first COVID-19 case was reported.
CO-OP BANK GROUP MD Gideon Muriuki
Image: ENOS TECHE

Co-op Bank Group has restructured loans worth Sh39.2 billion to support borrowers bartered by adverse effects of coronavirus.

Speaking while releasing the lender’s financial results for the second quarter ended June 30, Co-op Bank Group MD Gideon Muriuki said the pandemic has presented a tough operational environment hurting revenue streams for most clients.

‘’We are actively engaging our customers to support them through this period by re-aligning servicing of facilities, funding and transactional needs as the situation unfold,’’ Muriuki said.

In Mid-March, the Central Bank of Kenya allowed lenders to offer relief to distressed customers after the first COVID-19 case was reported.

This was part of measures adopted by the government to support Kenyans from a looming economic crisis caused by the outbreak of the disease in the country.

According to CBK, the total loan restructured by end of June stood at Sh2.9trillion of the total banking sector loan book from Sh679.6billion in May

Personal and household loans topped the list at Sh240 billion, an equivalent of 30 per cent of all loans in the sector while other sectors saw loans worth Sh604.4 billion restructured.

Banks have now started feeling the impact of the tough economic times, with Co-op Bank for instance forced to take a higher loan loss provision of Sh1.9 billion during the period under review compared to Sh1.18 billion same period last year, an increase of 57.9 per cent.

This slightly dented the bank’s net profit for the period, which fell to Sh7.2 billion compared to Sh7.5 billion in the corresponding period last year, representing a 3.6 per cent drop.

Consequently, this saw the lender’s gross earnings shrink marginally to Sh9.6 billion compared to Sh10.4 billion last year.

Even so, the drop in profits for Co-op Bank is least compared to others, which have since announced their half-year results.

Muriuki said the strong performance is an affirmation of the resilience of the business in view of the most challenging operating environment occasioned by the Covid-19 pandemic.

He added that they continue to implement proactive enterprise risk management initiatives to ensure uninterrupted business operations.

‘’We have fortified our digital channels to support uninterrupted access to banking services by our customers. At least 90 per cent of services are away from counters,’’ Muriuki said.

During the period under review, the bank’s income grew to Sh24.2 billion from Sh23 billion while net interest income rose by 12 per cent to Sh15.9 billion.

The bank’s total assets grew by a whopping Sh84.3 billion to hit Sh514 billion compared to Sh430 billion the same period last year.

The lender continued to advance loans despite increased uncertainties in the market with the report showing that its loan book grew by six per cent to Sh272.2 billion from Sh257.6 billion.

Investors’ fund grew by Sh80.1 billion from Sh71 billion similar period last year, enabling the lender to continue pitching for big-ticket deals.

Its operating expenses however grew by 16 per cent from 12.6 billion to Sh14.6 billion especially on higher loan loss provision.