Co-op Bank Q1 2016 Profit Rises to KES 4.94Bn

The Co-operative Bank Group reported a profit before tax of KES 4.94 billion for Q1 2016 compared to KES 4.50 Billion recorded in the first quarter of 2015, a 10% growth.

Profit after tax for the Group was Kshs 3.44 Billion compared to Kshs 3.17 Billion in the previous year, representing an 8% growth rate.

The commendable performance has been realised following the successful implementation of the ‘Soaring Eagle’ transformation project that the Bank has been driving since 2014, with a critical focus on cost optimization, improvement in operating efficiencies and innovative customer delivery platforms.

The project has led to the achievement of the following key milestones;

• Branch Transformation and channel migration whereby more than 85% of our transactions have been moved to alternative channels leading to impressive channel optimization
• Sales Force Effectiveness which has seen us maximize on the Bank’s value chain to increase market share by generating new opportunities from the strong over 6 Million account holders Base
• Enhanced credit management systems, processes and tooling to ensure a quality loan book
• Enhanced Data Analytics which is playing a key role in driving sales with lead generation, proactive credit management and optimum frontline accountability

Operational efficiencies resulting from this project have seen our Cost to Income Ratio improve from a high of 58.8% in Dec 2015 to 51% in March 2016.

Key highlights:

Profit & Loss

• Growth in the Loan book supported a 25% rise in interest income from loans to stand at Kshs.8.3 billion compared to Kshs. 6.7 billion recorded in the same period in 2015.

• Total interest income grew by 31% from Kshs 8.2 billion to Kshs 10.7 billion supported by a 17% growth on earning assets.

• Total interest expense grew by 67% from Kshs 2.3 billion to Kshs 3.9 billion mostly attributable to a 12% growth in deposits as well as increased cost of funding

• Total operating income grew by 18% to Kshs 10.3 billion from Kshs 8.7 billion.

• Fees and commissions on loans and advances increased by 10% from Kshs 0.6 billion to Kshs 0.7 billion compared to the same period last year.

• Foreign exchange income grew by 10% from Kshs 0.46 billion to Kshs 0.50 billion compared to the same period last year.

• Total Non-Interest income grew by 21% from Kshs 2.87billion to Kshs 3.46 billion compared to the same period last year. This countered the 22% rise in Total operating expenses which increased to Kshs 5.24 billion in 2016 from Kshs 4.30 billion in 2015

Balance sheet

• The Bank has substantially grown the Balance Sheet with Total Assets at over Kshs.350.7 Billion (a +13% growth) supported by a growing customer base now standing at over six million account-holders.

• Total assets grew by Kshs 41 billion (13%) to Kshs. 350.7 billion compared to Kshs 309.6 Billion in the same period last year.

• Net loans and advances grew by Kshs 29.6 Billion (16%) to Kshs. 213.7 billion compared to Kshs. 184.1 Billion in the same period last year.

• Deposits grew by Kshs. 29.4 billion to Kshs. 267.4 billion from Kshs. 238 billion last year, a 12% increase.

• Shareholders’ funds grew from Kshs. 47.1 billion to Kshs. 55.3 billion, a growth of 17%, supported by a steady retention of earnings and improved earning over the years.

Innovative Customer Delivery Platforms

• Successful Universal Banking model and the implementation of Sales Force Effectiveness has seen the Group serve over 6 million account holders across all sectors supported by our multichannel strategy that includes 144 Branches, 8,765 Co-op Kwa Jirani Banking Agents and over 570 ATMs.

• The versatile Mco-op Cash Mobile Wallet has continued to play a pivotal role in the growth of non-funded income with over 2.8 Million active customers.