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Co-operative Bank of Kenya posted Sh13 billion net profit in the first half of 2024, up from Sh12.1 billion reported in the previous year on higher income and customer deposits. The lender’s profit before tax stood at Sh18.2 billion, representing a 10.7 per cent growth compared to the Sh16.4 billion recorded in the same period in 2023.

The Nairobi Securities Exchange (NSE) listed bank’s strategic focus on sustainable growth saw a 22.1 per cent Return on Equity (RoE), underscoring its strength in the market. Customer deposits grew even more significantly, rising to Sh507.4 billion, a 9.4 per cent increase from Sh463.9 billion, further strengthening the bank’s liquidity position.

Group Managing Director & CEO Gideon Muriuki, said the lender’s total assets grew to Sh716.9 billion, marking a 7.8 per cent increase from Sh664.9 billion posted in the same period last year.

“The group reports excellent efficiency gains from the various initiatives to record a Cost-to-Income Ratio of 46.6 per cent in 1H 2024 from 59 per cent in FY2014 when we began our Growth Efficiency journey,” he said. During that period, net loans and advances surged, reaching Sh375.6 billion, a 2.8 per cent growth from Sh365.4 billion in 2023.

The bank continues to leverage its new core banking system to support its digital strategy, which has seen over 93 per cent of all customer transactions move to alternative delivery channels. This shift to digital channels has improved customer experience and contributed to the bank’s cost-efficiency.

According to Muriuki, the Mco-op Cash Mobile wallet continues to drive substantial non-funded income streams. In the first half of 2024 alone, the bank disbursed Sh36.4 billion in loans through the mobile platform, averaging Sh6.1 billion per month. This platform has become a critical tool for the bank, enabling it to reach a broader customer base and offer convenient financial solutions.

Shareholders’ funds

The bank’s shareholders benefited from this growth, with shareholders’ funds increasing to Sh126.7 billion, a 17 per cent rise from Sh108.3 billion in 2023.

This growth was driven by strong retained earnings of Sh15.1 billion, reflecting the bank’s ability to generate and retain profits effectively.

Total operating income for the period grew by 10.9 per cent, from Sh35.4 billion to Sh39.2 billion, while total operating expenses also increased by 11.1 per cent, from Sh19.1 billion to Sh21.3 billion.

Despite the rise in expenses, the bank’s income growth outpaced the increase in costs, highlighting its operational efficiency and ability to manage expenses effectively. In the first half of 2024, Co-operative Bank disbursed Sh7.5 billion to MSMEs through its Mobile E-Credit solution, with MSMEs now accounting for 15.9 per cent of the total loan book.

This support for small businesses is a testament to the bank’s commitment to driving economic growth at the grassroots level. Co-op Bancassurance Intermediary Ltd also posted strong results, with a Profit Before Tax of Sh682.7 million in the first half of 2024, driven by strong penetration of the bancassurance business.

Meanwhile, Co-operative Bank of South Sudan, a unique joint venture with the Government of South Sudan, recorded a profit before tax of Sh264.3 million. However, this was offset by a monetary loss of Sh252.4 million due to hyperinflation accounting, caused by the devaluation of the South Sudan Pound.