Co-operative Bank records Sh10.44 billion profit in half-year 2019

Co-operative Bank Group CEO Gideon Muriuki.
The Co-operative Bank Group has reported a pre-tax profit of Sh10.44 billion for the first half of 2019 compared to Sh9.98 billion recorded in a similar period in 2018. A growth of 5 per cent against the backdrop of a challenging economic environment in the period. Profit after tax was Sh7.5 Billion compared to Sh7.1 Billion in the previous year.

The Group continues to leverage on the benefits of the “Soaring Eagle” Transformation Agenda that has re-tooled and equipped the business with added competitive edge as reflected in the sustained growth in market share across all market segments and Counties, which has progressively deepened their Financial Inclusion model rooted in the over 15 million-member co-operative movement, that is the face of Kenya.

The Group is also employing a strategy for continued deepening and dominance in its domain market segment while reviewing opportunities to grow alternative revenues from other services like Bancassurance, and Leasing business being done through Co-op Bank Fleet Africa Leasing Ltd, a strategic joint venture with Super Group of South Africa.

The key financial highlights include

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Profit & Loss

The total operating income grew by 5 per cent from Sh21.8 billion to Sh23 billion.

Non-interest income increased by 25 per cent from Sh7 billion to Sh8.8 billion while interest income from government securities increased by 22 per cent from Sh4.5 billion to Sh5.5 billion.

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The operating expenses remained controlled, growing by 5 per cent from Sh11.97 billion to Sh12.6 billion as a result of prudent cost management strategy and enhanced efficiency.

Balance sheet

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Total assets grew by Sh31.2 Billion (+8 per cent) to Sh430 Billion compared to Sh398.4 Billion in the same period last year.

Net loans and advances book grew by 3 per cent from Kshs.252.1 to Sh257.6 billion.

Investment in Government securities grew by Kshs.14.8 billion (+18.4 per cent) to Sh95 billion compared to Sh80.2 billion in first half of 2018.

Customer deposits grew by 8.3 per cent from Sh300 billion to Sh325 billion while borrowed funds from development partners grew by Sh3 billion (+16 per cent) to Sh21.5 billion from Kshs.18.4 billion in the previous year.

Shareholders’ funds grew from Sh68 billion to Sh71 billion.

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The bank closed the quarter on a sound capital base, with adjusted total capital against total risk-weighted assets standing at 16.7 per cent, which is 2.7 per cent above the statutory minimum of 14.5 per cent.

Innovative Customer Delivery Platforms

Through its multi-channel strategy, the Bank has successfully moved 88 per cent of all customer transactions to alternative delivery channels that include mobile banking, an expanded 24-hour contact centre, 585 ATMs, internet and over 12,956 Co-op Kwa Jirani banking agents.

A successful Universal Banking model and the implementation of Sales Force Effectiveness has seen the Group serve 8.2 million Account-holders across all sectors.

Key focus on digital banking, with the all-telco Mco-op Cash Mobile Wallet continuing to play a pivotal role in the growth of non-funded income with over 4.6 million customers registered and loans worth over Sh14.4 billion disbursed as at the close of first half 2019.

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Over 46,700 customers have taken up the rolled-out MSME packages that we launched in 2018 and 3600 have been trained on business management and planning. We have earmarked Sh15.2 billion for MSME lending and to date disbursed Sh3.4 billion under the program. These include 80,249 mobile unsecured business e-loans and 1,162 supply-chain loans disbursed in first half 2019 alone.

Our unique model of retail banking services through Sacco FOSAs enabled us provide wholesale financial services to over 464 FOSA outlets, and issue over 1 million Sacco-Link cards.

Subsidiaries

Co-operative Bank of South Sudan that is a unique Joint Venture (JV) partnership with Government of South Sudan (Co-op Bank 51 per cent and GOSS 49 per cent) made a Profit before tax of Sh93 million in Q2 2019 which was 19 per cent drop compared to Sh115 million posted in 2018.

Co-op Consultancy & Insurance Agency contributed Sh353.3 million as at 30th June 2019.

Co-op Trust Investment Services has aggressively grown the funds under management to almost Sh100 billion.

Corporate Social Responsibility Programs

Co-op Bank Foundation has provided Scholarships for gifted but needy students from all regions of Kenya.

The sponsorship includes; fully-paid secondary education, full fees for University education, Internships and career openings for beneficiaries.

The foundation is fully funded by the bank and has so far supported 7,032 students since the inception of the program.

The Co-operative Bank Group says it will continue to deliver good performance as it focuses on the growing the 8.2 million account-holder base, digital banking, the basket of innovative financial solutions, efficient delivery of services and multichannel access to retain market position and deliver business growth and profitability in the days ahead.

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