Co-op Bank profit up 10 per cent on interest income and commissions

By James Anyanzwa

The Co-operative Bank of Kenya has announced a 10 per cent growth in pre-tax profits for the nine months period ended September 30, 2009.

The bank’s profit before tax climbed to Sh2.85 billion from Sh2.59 billion in a similar period last year.

Gideon Muriuki, the Group’s managing director and chief executive described the performance as ‘impressive’ against hard economic times and the global recession.

"This is a commendable growth notwithstanding the challenging economic environment and the global downturn," Muriuki said.

According to the bank’s interim financial figures released yesterday, total customer deposits rose 18 per cent to Sh76.6 billion from Sh64.7 billion in a similar period last year.

Product diversification

Net loans and advances ascended by 24 per cent to Sh60.5 billion from Sh48.7 billion mainly aided by the bank’s diversified product lines and a competitive pricing mechanism.

Interest income surged 27 per cent to Sh4.9 billion from Sh3.87 billion while fees and commissions constituted 40 per cent of the Groups revenues.

Operating expenses rose by 16 per cent to Sh5.37 billion from Sh4.61 billion due to expansions the bank has undertaken to increase its footprint in the country.

Total assets soared by 26 per cent to Sh98.8 billion from Sh78.5 billion in the same period last year.

Muriuki attributed the bank’s sustainable growth to investments in various growth strategies such as alternative banking channels, cost management programmes and new business lines.

Among the bank’s alternative banking channels include Front Office Service Activity (Fosa) Project, Sacco link and Point of sale banking.

Muriuki said the bank has invested significantly in cost management initiatives such staff optimisation by leveraging on new outlets, automation of business processes and leasing option for all new bank outlets and some equipment that is cheaper and tax-efficient.

Co-op Bank’s new business lines include stockbroking, mortgaging, coffee marketing and regional expansions.

The bank is on course, making headway into Southern Sudan with five branches already running. It is also currently negotiating a strategic partnership with the Co-operative movement in Uganda and Rwanda.

In addition, Co-op Bank played a key role in setting up a coffee marketing society by the smallholder coffee growers.

The Kenya Co-operative Coffee Exporters limited is now fully operational, marketing coffee for the various coffee societies in the country.

Coffee farmers have been receptive to this initiative because among other things, it has increased the coffee prices.

This has injected the much-needed energy in the over Sh12 billion coffee industry.

Co-op Bank is the financier of the arrangement and will benefit from the key foreign exchange and other commissions income.

 

 

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