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Co-operative Bank of Kenya's said it would expand into Ethiopia and Uganda after reporting a rise in first-half pretax profit due to higher fees and net interest income.
Co-op Kenya said on Wednesday that pretax profit rose 15 percent to 6.7 billion shillings ($76.18 million) in the period to the end of June, compared with a year earlier.
The bank - Kenya's third-biggest by assets - said that, following a successful entry into South Sudan late last year, it would now target Ethiopia and Uganda.
Its two bigger rivals KCB, the country's largest lender by assets, and Equity Bank, have been expanding in the east African region, exploiting growing trade ties between countries and buoying their earnings.
"Our South Sudan subsidiary, which started operations in September 2013 is on the verge of breaking even and contributing positively to our profitability this year. Ethiopia and Uganda remain our new frontiers," Gideon Muriuki, Co-op Kenya's managing director said in a statement.
The bank's fees and commissions increased by 18.4 percent to 1 billion shillings while net interest income rose 12 percent to 9.9 billion shillings, it said.
Co-op Kenya, which mainly serves co-operatives and individuals in east Africa's biggest economy, said its loan book grew by 32.7 percent to 165 billion shillings, mirroring a rise in lending across the country's banking sector.
KCB, Equity and Barclays Kenya, have all reported a surge in lending for the first half of the year.
Analysts have said the steady interest rates prevailing in the market have buoyed lending.
Kenya's government says it will cut the government's local borrowing requirement in the second half of the year to help reduce interest rates even further after it successfully issued its first sovereign bond in June worth $2 billion.