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.
- Through our multi-channel strategy the Bank has successfully moved 85% of the customer transactions to alternative delivery channels particularly mobile banking, ATMs, internet and Co-op Kwa Jirani banking Agency outlets.
- 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 909,194 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%) continues to contribute to the Group’s bottomline, having made a profit of Kshs.11.5 million in Q1 2016, a turnaround from Kshs. 15 million loss in Q1 2015.
The Bank’s regional expansion strategy will involve similar Joint Venture models in other countries notably Rwanda, Uganda, Tanzania, DRC and Ethiopia in the next 5 years.
Corporate Social Responsibility Programs
- The bank’s wholly-owned subsidiary Co-op Consultancy & Insurance Agency whose core mandate is to build capacity in the co-operative movement, has carried out over 1,983 consultancy and advisory mandates since inception.
- 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 4,243 students since the inception of the program in 2007.
- Conclusion
As Co-operative bank continues to focus on the ongoing ‘Soaring Eagle’ Transformation project, leveraging on our over six million account-holders, innovative and diversified delivery platforms and improved efficiency, the Group projects to grow significantly to greater heights in 2016 and beyond.