This archive report was first published on 22 May 2020.
Co-operative Bank Group Managing Director Gideon Muriuki attributed the bank's unchanged profit after tax to an increase in non-funded and interest income, despite provisioning for bad loans and staff costs.
According to the bank's first-quarter earnings, profit after tax remained unchanged at Sh3.6 billion, with non-interest income growing by 19 per cent to Sh5 billion.
Net interest income from loans and advances increased by 8.5 per cent to Sh7.5 billion, bringing the bank's total operating income to Sh12.5 billion.
However, operating expenses grew by 20.6 per cent to Sh7.3 billion, eating into the revenues that the bank raked in during the period under review.
The bank attributed this to increased provisioning for bad loans, with Sh900 million set aside as a cover against possible default, an increase of 80 per cent from Sh501 million in March 2019.
As the economic effects of the Covid-19 pandemic begin to manifest, analysts believe that most borrowers will struggle to service their loans, with the Central Bank of Kenya (CBK) brokering a deal to extend repayment of personal loans by up to a year for those negatively impacted by the pandemic.
Co-op Bank's loan book grew by 9.8 per cent to Sh276.2 billion, with the bank also investing in Treasury Bills and Bonds, growing its investment in government securities by 11.5 per cent to Sh115.9 billion.
As a result, total assets grew by Sh44.7 billion to Sh470.4 billion, while customers' deposits grew by 6.9 per cent to Sh339.6 billion.
