This archive report was first published on 15 November 2019.
Co-operative Bank's net profit for the first nine months of 2019 has grown significantly, reaching Sh10.9 billion. This represents a 5.5 percent increase compared to the same period in the previous year.
The growth in net profit can be attributed to the strong performance of non-interest income, which rose by 33.3 percent to Sh14.1 billion. This was mainly driven by the growth of fees and commissions on loans and advances.
Group CEO Gideon Muriuki attributed the growth in non-interest income to the success of the bank's mobile wallet, MCo-op cash, which has registered 4.7 million customers. This has enabled the bank to disburse loans valued at over Sh27.6 billion as at the end of the nine months.
"The group has continued with a strategy for continued deepening and dominance in our domain market segment leveraging our successful penetration of the micro, medium and small enterprises and the saccos while reviewing opportunities to grow alternative income streams from other services," said Mr Muriuki.
Despite the growth in non-interest income, the bank's total interest income dropped marginally by 1.6 percent to Sh30.4 billion. However, interest income from government securities was up 18.1 percent to Sh8.2 billion, while income from deposits and placements with other banking institutions nearly doubled to Sh340 million.
Co-op's South Sudan joint venture, in which it owns a 51 percent stake, made a before-tax profit of Sh174.7 million compared to Sh235.12 million posted in a similar period last year.
Mr Muriuki projected more business growth and profitability, riding on increased lending and efficient delivery of services using alternative channels such as mobile banking.
"The repeal of the interest rate caps has added impetus to the growth of the economy," he said, projecting a faster pace of growth in the loan book.
During the period, operating expenses grew 11 percent to Sh19.8 billion on account of higher provisioning for non-performing loans.
