This archive report was first published on 22 May 2020.
Co-operative Bank of Kenya has announced flat profits for the three months to March, with net profit for quarter one standing at Sh3.58 billion, similar to Sh3.59 billion in the same period last year.
The bank's income from loans and fees, such as ATM transactions, was affected by rising employee costs and provision for bad debts.
Co-op Group Managing Director Gideon Muriuki attributed the decline in profits to a 20.6 per cent increase in operating expenses, driven by loan loss provision and staff expenses.
Staff costs rose to Sh3.4 billion from Sh2.7 billion, while loan loss provisions nearly doubled from Sh510 million to Sh900 million.
As a result of the COVID-19 crisis, banks expect reduced demand for loans, which will ultimately slow down lenders' profits.
“With the Covid-19 crisis, the bank has proactively engaged all the customers and reviewed terms for customers requiring an interest moratorium period, those requiring a better structure/longer repayment period and customers requiring additional funding to manage the crisis,” Mr Muriuki said.
The bank has restructured loans worth Sh15 billion for struggling borrowers and managed to move 90 per cent of all customer transactions to alternative delivery channels, including mobile and internet banking as well as agents.
“Key focus on digital banking, with the all-telco MCo-opCash Mobile Wallet continuing to play a pivotal role in the growth of non-funded income with 5.6 million customers registered and loans worth over Sh16 billion disbursed in Quarter 1 2020,” Mr Muriuki said.
The Co-operative Bank had offered to fully acquire Jamii Bora Bank in the latest instance of consolidation in the banking industry.
