Kenya’s Co-operative Bank Group eyes regional expansion

Co-operative Bank Group Kenya’s third-largest lender by asset base plans to embark on a new growth phase, with a keen eye on regional markets to sustain its growth momentum and profitability.

“Part of our 5 year strategic plan is to drive a successful regional expansion strategy riding on the unique co-operative model,” Group Chief Executive Gideon Muriuki said during the group’s 8th Annual General Shareholders meeting on Friday. “The Future of Co-operative Bank Group Is Promising,” he added.

The growth strategy is to increase its shareholder value and be the dominant bank in the region by offering a wide range of innovative financial solutions. This will be focused on the cooperatives.

“We have a 5 years corporate strategic plan 2015-2019, approved by the Board of Directors in August 2015 and it is underpinned by15 key strategic objectives that will guide the implementation of the plan,” said Muriuki.

Within the period, they plan to set up in Ethiopia, Rwanda, Uganda and Tanzania to replicate the success from South Sudan whose joint venture with Government of South Sudan made a profit of Co-op Bank Quarter 1 2016  Kshs.11.5 million in Q1 2016, a turnaround from Kshs. 15 million loss in Q1 2015.

The group reiterated that the strategic and majority shareholder of the bank is through cooperatives and their mandate was to support them to enable them to thrive, extending financial deepening.

“We plan to be the leading provider of financial services to the Co-operatives movement in Kenya and the region. Our plan is to provide value added services to co-operatives and maintain over 95 percent of total assets and liabilities of the movement,” said Muriuki.

The bank’s profit after Tax for full year 2015 stood at Kshs 11.7B compared to Kshs 8.01B in 2014, a 46 percent rise compared to 2014.

Subsequently, the group’s Q1’2016 Profit before Tax recorded Kshs.4.94 billion for Q1 2016 compared to Kshs.4.50 Billion recorded in the first quarter of 2015, a 10 percent growth. Its  core earnings per share growth of 7.7 per cent to Kshs 0.70 per share from Kshs 0.65 per share in Q1’2015, driven by a 17.7 percent growth in operating revenue in Q1’2016 which was outpaced by a 21.7 percent rise in operating expenses in Q1’2016.

The group has a projected growth in profit before tax of 20 percent, a growth in loans and advances of 19 percent and a growth in customer deposits of 25 percent in 2016.

The Group’s future growth is anchored on enhanced credit management systems and processes to ensure a quality loan book, enhanced data analytics to drive sales through leads generation, and improved operational efficiencies that will drive down operating costs.

During the AGM Stanley Muchiri and Julius Riungu were re-elected for another term of three years. The shareholders also approved the re-appointment of Ernst and Young as auditors of the company.