Co-Op Bank Q3 2015 Profit Before Tax Increases By Over 33 Percent

The Co-operative Bank Group is pleased to report a Profit before Tax of Kshs.12.16 billion for Quarter 3 2015 compared to Kshs.9.13 Billion recorded in the corresponding period in 2014, an impressive +33.2% growth.

Profit after tax for the Group was Kshs 8.62 Billion compared to Kshs 6.31 Billion previous year, representing a +36.6% growth rate.

This commendable performance is an affirmation of the significant benefits arising mainly from the successful implementation of the ‘Soaring Eagle’ transformation project that the Bank has been driving from last year with a critical focus on cost optimization, improvement in operating efficiencies and innovative customer delivery platforms.

The Bank has substantially grown the Balance Sheet with Total Assets at over Kshs.332.9 Billion (a +23% growth) supported by a growing customer base now standing at over 5.7 Million account-holders.

Key financial highlights include:-

 Profit & Loss

• Total operating expenses remained tightly controlled to stand at Kshs 14.6 billion in quarter 3 2015 from Kshs 14.4 billion in the previous year, a marginal 1.1% rise. This attests to the successful cost optimisation strategy, a key deliverable of the ‘Soaring Eagle’.

• Total operating income grew by 13.4% to Kshs 26.63 billion from Kshs 23.48 billion.

• Growth in the Loan book supported a 16% rise in net interest income Kshs.17.38 billion compared to Kshs. 15.04 billion recorded the same period in 2014.

• Fees and commissions on loans and advances increased by 10% from Kshs 1.6 billion to Kshs 1.8 billion compared to the same period last year. 

• Foreign exchange income grew by 60% from Kshs 1.09 billion to Kshs 1.73 billion compared to the same period last year.

Balance sheet

• Total assets grew by Kshs 62.21 billion (23%) to Kshs. 332.89 billion compared to Kshs 270.68 Billion in the same period last year.

• Net loans and advances book grew by Kshs 36.39 Billion (21%) from Kshs. 212.36 billion compared to Kshs. 175.97 Billion in the same period last year. 

• Deposits grew by Kshs. 50.82 billion to Kshs. 257.46 billion from Kshs. 206.64 billion last year, a 25% increase.

• Shareholders’ funds grew from Kshs. 41.84 billion to Kshs. 49.54 billion, a growth of 18.4%, supported by a steady earnings retention policy and improved earnings over the years.

Innovative Customer Delivery Platforms

• Successful Universal Banking model and the implementation of Sales Force Effectiveness has seen the Group serve over 5.7 million customers across all sectors supported by our multichannel strategy that includes 143 Branches, 8765 Co-op Kwa Jirani Banking Agents and over 567 ATMs.

• The versatile Mco-op Cash Mobile banking platform has continued to play a pivotal role in the growth of non-funded income with over 2.5 Million active customers.

• Through our multi-channel strategy the Bank has successfully moved over 72% of the customer transactions to alternative delivery channels particularly mobile banking, ATMs, internet and Co-op Kwa Jirani banking Agency outlets.

• Banc assurance has grown tremendously (by +87%) contributing to the non-funded income base and also helping our customers to mitigate financial risk through purchase of insurance products.

• Our unique model of retail banking services through Sacco FOSAs enabled us provide wholesale financial services to over 555 FOSA outlets. The bank has currently issued over 866,639 Sacco link cards.

Regional Expansion

Co-operative Bank of South Sudan that is a unique Joint Venture (JV) partnership with Government of South Sudan (Co-op Bank 51% and GOSS 49%) has successfully contributed to the bottom line having made a profit of Kshs.246.8 million in Q3 2015.

The Bank’s regional expansion strategy will involve similar Joint Venture models in other countries notably Rwanda, Uganda, Tanzania and Ethiopia in the next 5 years.

Corporate Social Responsibility Programs

The bank’s wholly-owned subsidiary Co-op Consultancy & Insurance Agency, has continued to support the Co-operative Movement hence achieving;

• The core mandate of the company which is to build capacity in the cooperative movement

• The cooperatives which form the core clientele of the Bank are able to operate more efficiently and profitably providing better financial inclusion through the extensive network of Co-operatives

• Co-op Bank Foundation has provided Scholarships for bright but needy students from all regions of Kenya. The sponsorship includes; fully paid secondary education, full fees for University education, Internships and career openings for beneficiaries. The foundation is fully funded by the bank and has so far supported 3,604 students since the inception of the program in 2007.

Conclusion

The Co-operative Bank Group will scale greater heights through the ongoing transformation initiative and our 5.7 million customers will benefit from the basket of innovative financial solutions, multichannel access and efficient delivery of services.

Operational efficiencies coupled with the substantial growth in the balance sheet have supported a notable improvement in the Cost to Income Ratio from a high of 58.2% in Q3 2014 to 49% in Q3 2015.

The ‘Soaring Eagle’ Transformation Agenda has enabled the group to deliver impressive performance in an increasingly competitive banking environment.