GROWTH

Kingdom recovers, lifts Co-op Bank's six month earnings

The lender's total assets grew by Sh 59.1 Billion

In Summary
  • The lender's net profit rose to Sh7.4 billion from Sh7.2 billion same period last year. 

  • Generally, the Group's gross earnings grew by 10 percent compared to the Sh9.6 billion recorded in the second quarter of 2020.
Coop Bank Group managing director Gideon Muriuki at a past event.
Image: COURTESY

The sustained growth at Kingdom Bank and growth in interest and non-interest income lifted Cooperative Bank Group's earnings for the six months to June by 2.3 percent. 

According to the half-year financial results released yesterday, the lender's net profit rose to Sh7.4 billion from Sh7.2 billion same period last year. 

Kingdom Bank contributed a profit before Tax of Sh275 million during the period under review compared to the 2020 full-year loss of Sh124 million.

Generally, the Group's gross earnings grew by 10 percent compared to the Sh9.6 billion recorded in the second quarter of 2020.

The increase came on the back of total operating income—made up of interest income and non-interest income—growing by 20 percent to Sh29.2 billion.

Net interest income grew by 18 percent to Sh18.8 billion as the loan book expanded by 11 percent to Sh302.1 billion.

Non-interest income was up 24 percent to Sh10.3 billion. This was supported by its Mco-op Cash mobile wallet which was disbursing loans valued at about Sh5.6 billion monthly.

The lender's total assets grew by Sh 59.1 Billion or 12 percent to Sh573 billion compared to Sh513.9 billion in the same period last year.

Net loans and advances book grew by Sh29 billion or 11 percent from Sh272.2 billion to Sh 301.2 billion.

Investment in Government securities grew by Sh59.6 billion or 49 percent to Sh182 billion compared to Sh122.4 billion in 2020.

Customer deposits grew by six percent from Sh384.6 billion to Sh407.7 billion.

Co-op’s operating expenses, however, rose by 28 percent or Sh4.1 billion to Sh18.7 billion on account of 123 percent growth in provisioning for loan defaults.

Loan loss provisioning rose to Sh4.2 billion from Sh1.9 billion, with the lender’s chief executive Gideon Muriuki attributing the rise to the need to recognise the economic hardships still facing borrowers in the Covid-19 environment.

“The Group prudentially increased loan loss provisions to Sh4.2 billion in appreciation of the challenges that businesses and households continue to face due to the economic effects of the ongoing pandemic,” said Muriuki.

Co-op’s move contrasts with that of some of its tier I peers such as Equity and Stanbic who cut their loan loss provisioning, helping them to book larger jumps in half-year earnings.

The move was despite the stock of gross non-performing loans falling to Sh50.84 billion at the end of June from Sh59.1 billion in December.

Muriuki said that customers have resumed payments on most of the Sh49 billion loans that the bank had restructured by end of March 2021 to accommodate those hit by the pandemic.

“The restructured facilities are largely performing as per the realigned agreements. Our customers continue to show resilience therefore improving their repayment as the economy picks up in various sectors,” said  Muriuki.

Co-op’s subsidiaries posted improved results, with the 90 percent-owned Kingdom Bank returning Sh275 million net profit. It had booked a Sh200.9 million loss in the full year to December.

Co-op Consultancy and  Insurance Agency returned Sh433.8 million pre-tax profit on increased bancassurance business while that of Co-op Trust Investment Services was Sh47.9 million as funds under management rose by Sh59.1 billion.

However, the Co-operative Bank of South Sudan returned a monetary loss of Sh290 million due to hyperinflation accounting following the South Sudanese pound devaluation.