Co-op doubles dividend as profit hits Sh3.7 billion

By James Anyanzwa

The Co-operative Bank has announced an 11.2 per cent growth in pre-tax profits for the full-year period ended December 31.

The Group’s profit before tax climbed to Sh3.74 billion, from the previous year’s Sh3.36 billion, prompting the bank’s board of directors to propose a 100 per cent increment in dividend payment.

The shareholders will now each pocket 20 cents per share in 2009, up from 10 cents per share in 2008.

Mr Gideon Muriuki, the Group’s managing director, termed the performance as ‘satisfactory’, in view of the difficult operating environment that characterised the period under review.

"This is a commendable growth particularly in a challenging economic environment and the global down turn experienced last year," Muriuki told an investor briefing in Nairobi on Thursday.

Client base

According to the bank’s audited financial statements released yesterday, total customers’ deposit grew 39 per cent to Sh91.6 billion, up from Sh65.9 billion.

The increase was attributed to a 71 per cent growth in client base, which rose to 1.2 million account holders.

The group’s total asset portfolio swelled 33 per cent to Sh110.7 billion, up from Sh83.5 billion.

The loan book rose 18 per cent to Sh62.3 billion, up from Sh52.9 billion, mainly supported by the bank’s diversified product lines and a competitive pricing regime.

Muriuki attributed the remarkable performance to prudent risk management, cost rationalisation, sustained investment in human capital, and expanded income streams from new business opportunities.

He said the bank diversified its revenue streams by investing in home-loan facilities and enhancing its points of sale, stockbrokerage and coffee marketing initiatives.

During the period under review, the group’s net interest income rose 19 per cent to Sh6.8 billion, up from Sh5.7 billion, while the non-funded income jumped 24 per cent to Sh4.95 billion, from Sh4 billion, mainly from fees and commissions.

Fees and commissions charged on automated teller machines (ATMs), personal and business banking, forex income and letters of credit constituted 42 per cent of the bank’s total revenue.

Operating expenses rose to Sh8 billion, up from Sh6.3 billion, thanks to the expansion and growth of the business.

Provisions for bad and doubtful debts, however, increased 56 per cent to Sh628 million, from Sh403 million in 2008. This increase is largely attributed to the harsh economic environment