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Tier one lender Co-operative Bank of Kenya (Co-op Bank) shares could rise nearly a quarter over the next 12 months, analysts said, as a low-interest-rate environment and a turnaround in its South Sudan unit bolster earnings momentum after the lender posted a record 16.9 per cent jump in full-year net profit.
The stock has surged 95 per cent over the past year to trade at Sh27.00, but AIB-AXYS Africa set a one-year target price of Sh33.38 in a note dated April 1, citing an undemanding valuation and a resilient core business.
“At the current market price, the stock is trading at a P/E ratio of 5.3x and a P/B ratio of 1.0x,” the brokerage said, issuing a “buy” recommendation.
The bank reported profit after tax of Sh29.75 billion for the year ended 31 December 2025, up from Sh25.46 billion a year earlier, driven by a 22.0 per cent surge in net interest income to Sh62.85 billion. Total operating income rose 13.9 per cent to Sh91.89 billion.
The board proposed a total dividend of Sh2.50 per share, a 67 per cent increase from Sh1.50 paid in 2024, after the bank issued its first-ever interim dividend of Sh1.00. The proposed payout translates to Sh14.67 billion, with the country’s 15-million-member cooperative movement expected to receive an estimated Sh9.47 billion.
“This is the best-ever performance by the bank, which underscores the significant gains made under the 2025-2029 Good to Great Strategy,” Group Chief Executive Gideon Muriuki said in a statement.
Total assets expanded 11.3 per cent to Sh827.35 billion, while customer deposits rose 13.4 per cent to Sh574.17 billion. Loans and advances increased 12.6 per cent to Sh421.00 billion. The bank said more than 90 per cent of customer transactions are now processed through digital channels, with e-credit disbursements reaching Sh72.96 billion.
The gross non-performing loan ratio improved to 15.8 per cent from 17.2 per cent a year earlier, even as the stock of bad loans rose 3.5 per cent to Sh73.53 billion. Provision coverage increased to 66.0 per cent, up 2.1 percentage points.
Analysts expect the lender to maintain earnings momentum into 2026, supported by a growing customer base, an extensive branch network of 222 outlets, and continued digital investment.
“Key drivers will include a pickup in credit demand across various segments as the economy continues to grow, and lower lending rates, which should reduce the cost of funds,” AIB-AXYS said.
With interest rates expected to remain relatively low throughout the year, the bank is better positioned to negotiate cheaper deposits, preserving margins, it added.
Subsidiaries are seen as a key anchor for growth. Co-operative Bank’s South Sudan unit returned to profitability in 2025, posting a profit before tax of Sh236.3 million after a loss the previous year. Co-op Bancassurance Intermediary posted Sh1.49 billion, up 23.7 per cent, while Co-op Trust Investment Services saw profit before tax surge 142 per cent to Sh936.2 million.
The brokerage said a low-interest-rate environment should support loan repayments, particularly as the lender implements a revised credit pricing model. However, it flagged the Middle East conflict as a downside risk to growth if tensions persist.
The bank’s shares have gained 28 per cent over the past month and 51.7 per cent over three months. The 52-week high stands at Sh31.50. Return on equity stood at 19.1 per cent, above the industry average.
