Co-op Bank rakes in Sh18.4b profit on interest income jump

Co-op Bank Group Chief Executive Gideon Muriuki. [File, Standard]

Tier one lender Co-operative Bank of Kenya (Co-op Bank) has posted a 7.6 per cent jump in net earnings to Sh18.4 billion for the first nine months of the year. 

Co-op Bank is the first major lender to announce its earnings this week, offering investors insight into the possible strength of commercial lenders in a challenging economic climate. 

Co-op Bank Group Chief Executive Gideon Muriuki said in a statement yesterday that the bank’s jump in earnings was driven by growth in both interest and non-interest income, coupled with control on costs which recorded a drop, offering relief into the lender’s bottom line. 

Total operating income rose 2.3 per cent to Sh53.4 billion. The bank’s net interest-funded income grew at the fastest pace, increasing by 2.5 per cent to Sh32.8 billion from Sh32 billion in a similar period last year. 

Social impact

The lender’s non-interest income also grew by 2.1 per cent to Sh20.6 billion from Sh20.2 billion in 2022, it said.

Investors and lawmakers across the globe have been increasingly questioning companies about their environmental and social impact amid calls for major global businesses to make significant investments in ESG (environmental, social and governance) initiatives. 

Co-op Bank was this week named the overall winner at the Kenya Bankers Association (KBA) 2023 Sustainable Finance Catalyst Awards.

This is the fourth time in six years that Co-op Bank has been named overall winner, having also won the overall title in 2017, 2019 and last year 2022.

The awards were created to recognise institutions that practice sustainable finance, which has a direct positive impact on the financial sector, the economy, the environment and society. 

“Sustainability is fully integrated into our business model that stands on the three pillars of economic sustainability, social sustainability and environmental Stewardship,” said Mr Muriuki.

“As a bank that is predominantly owned by the 15 million-member co-operative movement that is represented in all regions of the country, we are inclusive by design, which has enabled us to not only deliver shared prosperity today but also helped us build an awareness and prudence to avoid participation in activities that risk putting future generations in jeopardy.”

Co-op Bank also noted it plans to garner fresh momentum on the digitisation front from its recent successful transition to a new core banking system named Finacle.

The lender says Finacle is rated globally as the most robust core banking system.

Co-op Bank recently won the race to handle billions of shillings that pass through the now-regulated coffee exchange market annually, boosting the tier-one lender’s non-funded income streams.

Coffee trading 

The lender will under the new deal provide the Direct Settlement System platform on which the clearing and settlement of coffee trades are conducted as provided for in the new coffee trading regime supervised by the Capital Markets Authority (CMA).

Co-op Bank said earlier it had set aside a Sh12.6 billion war chest for affordable loans to small businesses. The bank also signed the long-term credit agreement with global institutional investors led by the German fund, Deutsche Investitions (DEG).

[e-mail]