The Co-operative Bank of Kenya Limited announced results for the half year 2015 results with the following highlights:
- Net interest income inched up 18.6 percent from KES 9.93bn in 2014 to KES 11.77bn in 2015 driven by stronger loan book growth.
- Non-interest income declined by 4.3 percent from KES 6.24bn in 2014 to KES 5.97bn in 2015. This was driven by a 4.6 percent decline in fees and commission. In 2014, the high growth in fees and commission was pushed up by a one off increase in card issuance income. Forex income and dividend income recorded a 9.7 percent and 28.3 percent increase respectively.
- Total operating income grew by 9.7 percent to KES 17.74bn in 2015. This was attributed to growth in alternative banking channels such as agency and mobile banking. The alternative banking channels currently processes over 65.0 percent transactions.
- Loan loss provisions increased by 66.7 percent from KES 400.04mn in 2014 to KES 667.00mn in 2015 while nonperforming loans (NPL) ratio slightly declined by 2.7 percent from 3.7 percent in 2014 to 3.8 percent in 2015.
- Operating expenses declined by 4.0 percent from KES 9.44bn in 2014 to KES 9.06bn in 2015. This was attributed to a 4.3 percent decline in staff cost following a restructuring conducted in 2014 as well as freezing off on new recruitment.
- The bank recorded a 29.6 percent growth in pretax income from KES 6.76bn in 2014 to KES 8.75bn in 2015. Net income grew by 32.3 percent to KES 6.24bn translating to an earnings per share of KES 1.28 in 2015.
- Loans and advances to customers grew by 23.6 percent from KES 165.76bn to KES 204.84bn in 2015.
- Customer’s deposits grew by 24.6 percent from KES 199.24bn in 2014 to KES 248.35bn in 2015 while amount due to other banks increased by 6.7 percent to KES 4.41bnn in 2015.
- Borrowed funds went up by 37.6 percent from KES 13.58bn in 2014 to KES 18.68bn in 2015.
- Shareholders’ funds grew by 17.2 percent from KES 40.17bn in 2014 to KES 47.09bn in 2015.
Our view
We expect accelerated growth in non-interest income driven by increased use and efficiencies in the bank’s alternative channels such as agency banking, mobile banking and Bancassuarance.
Customer deposits are expected to maintain the fast growth, mainly from increased customer numbers and further integration and use of the mobile banking platform.
Going forward, we expect the bank to leverage on technology and innovation in optimizing operational efficiency.