This archive report was first published on 18 August 2021.
On August 18, 2021, Co-operative Bank reported a 2.3 per cent increase in its net profit for the first six months of the year, reaching Sh7.4 billion.
The growth was driven by a 20 per cent rise in total operating income, which includes interest income and non-interest income, to Sh29.2 billion.
Net interest income grew by 18 per cent to Sh18.8 billion, with the loan book expanding by 11 per cent to Sh302.1 billion.
Non-interest income also saw a significant increase of 24 per cent to Sh10.3 billion, with the bank's Mco-op Cash mobile wallet playing a key role in disbursing loans valued at about Sh5.6 billion monthly.
However, the bank's operating expenses rose by 28 per cent to Sh18.7 billion, mainly due to a 123 per cent growth in provisioning for loan defaults.
Loan loss provisioning increased to Sh4.2 billion from Sh1.9 billion, with CEO Gideon Muriuki attributing the rise to the economic hardships still facing borrowers in the Covid-19 environment.
"The Group prudentially increased loan loss provisions to Sh4.2 billion in appreciation of the challenges that businesses and households continue to face due to the economic effects of the ongoing pandemic," said Mr Muriuki.
Despite this, the bank's move contrasts with that of some of its tier I peers, who cut their loan loss provisioning, resulting in larger jumps in half-year earnings.
Co-op's subsidiaries also posted improved results, with Kingdom Bank returning Sh275 million net profit, Co-op Consultancy & Insurance Agency returning Sh433.8 million pre-tax profit, and Co-op Trust Investment Services returning Sh47.9 million.
