Co-op Bank Group posts Sh7.4b half year profits

Co-op Bank Group posted Sh7.4 billion net profit in the first half of 2021 to grow by 2.3 per cent on improved asset base, loans and government securities.

Despite the Covid-19 pandemic knocks, total assets soared by 12 per cent to Sh573 billion from Sh513.9 billion posted the same period last year, to gain Sh59.1 billion.

Increased profitability was on the back of a 20 per cent surge in the operating income to Sh29.2 billion during the period under review, as customer deposits grew by 6 per cent, from Sh384.6 billion to Sh407.7 billion.

Net loans and advances  expanded by Sh29 billion from Sh272.2 billion to Sh301.2 billion as the firm continued to fund projects and services countrywide.

Investment in government securities nearly doubled having grown by 49 per cent to Sh182 billion compared to Sh122.4 billion in 2020.

Gideon Muriuki group managing director and chief executive notes that the group banked on a strategy leveraging an enterprise risk management framework to foster uninterrupted access to banking services.

Focus on resilience

“We shall, riding on the unique synergies in the over 15 million-member co-operative movement that is the largest in Africa, continue to pursue strategic initiatives that focus on resilience and growth in the various sectors as the economy continues to recover,” said Gideon Muriuki group managing director and chief executive.

“Total operating income grew by 20 per cent from Sh24.2 billion to Sh29.2 billion,” said the CEO. 

In total, the group reported Sh10.5 billion pre-tax profit in what was a 10 per cent growth compared to Sh9.6 billion recorded in the second quarter of 2020.

The firm’s financials shows that the total operating expenses grew by 28 per cent from Sh14.6 billion to Sh18.7 billion on account of 123 per cent prudential growth in loan-loss provisions.

Loan loss provisions increased to Sh4.2 billion in the second quarter of year 2021, as businesses and households continued to face due to the economic effects of the Covid-19 pandemic.

“A total of Sh49 billion in loans was restructured during the CBK restructure window that ended on 31st March 2021 to support customers impacted by the pandemic,” said Muriuki.

Co-op Bank secured a long-term financing facility from the IFC (International Finance Corporation) amounting to Sh8.25 billion for on-lending to small traders at affordable terms.

Subsidiaries

Subsidiaries posted improved results with Co-op Consultancy and Insurance Agency posting Sh433.8 million pre-tax profit on a strong bancassurance business.

Kingdom Bank Limited contributed a profit before tax of Sh275 Million compared to 2020 full year loss of Sh124 million.

Co-op Bank holds a controlling 90 per cent equity interest in Kingdom Bank.

However, Co-op Bank of South Sudan unique joint venture (JV) partnership with Government of South Sudan posted Sh290 million monetary loss in the second quarter of 2021 on hyperinflation accounting due to currency devaluation of the South Sudanese pound. 

Overall, the group banked on a strong digital presence having moved 93 per cent of all customer transactions to alternative delivery channels, expanded 24-hour contact centre, mobile banking, internet banking and set up over 25,000 Co-op Kwa Jirani banking terminals.