The True Numbers of Co-operative Bank and the Future of the Banking Sector

By Soko Directory Team / Published May 27, 2016 | 12:39 pm

The banking sector in Kenya is revolutionizing at a greater rate than ever before. The coming of the digital wind of change is actually making the sector better and more interesting that it used to be in the past where those who used to work there were only serious individuals who only understood the language of money.

Co-operative Bank of Kenya released its Q1 financial results for the year 2016. People say that numbers do not lie. So, what were the numbers and what do these numbers mean and what do they portray about the banking sector?

During the first three months of 2016, the lender made a profit of 4.94 billion shillings before tax. This was an increase from what was recorded last year, 2015, at the same time which was 4.50 billion shillings. This was a 10 percent growth as compared to last year at the same time.

Read: Kenya’s Co-operative Bank Group eyes regional expansion

Profit after tax stood at 3.44 billion shillings. This was also an increase of eight percent from the previous 3.17 billion shillings. During this period, the growth in the loan book was as a result of a 25 percent rise in the interest income from loans to stand at 8.3 billion shillings compared to 6.7 billion shillings at the same time last year. Total interest income grew by 31 percent from 8.2 billion shillings to 10.7 billion shillings and this was as a result of 17 percent growth on earning assets.

What do these numbers mean?

Co-operative bank is a cooperative bank. As simple as that. This is a bank that supports cooperatives and people. Cooperatives are made up of people and in the event the institution that is their mother is moving in the right direction, it simply means that the people are on the right course too. Let us face the numbers again.

43% of Kenya’s Gross Domestic Product (GDP) was controlled by the cooperative movement. This is the highest proportional percentage of a total GDP that is attributed to cooperatives in the world. Kenya comes first, then New Zealand which only has 22 percent. Who is behind all these achievements? It is the bank that gives the cooperatives life. That is Co-operative Bank of Kenya.

The cooperative movement provides a total of two million jobs. Out of this, 70 percent of Kenyans depend either directly or indirectly on cooperatives. Kenya has 15,000 registered cooperative societies with 12 million members. Out of the 15,000 registered societies, Co-Operative Bank of Kenya has more than 3,800 of them.

In 2015, the Co-operative Bank of Kenya won the esteemed award of Bank of the Year 2015 for Financial Inclusion in The Bankers Awards run by the Financial Times of London. The bank beat a stiff challenge from over fifty other entries from all over the world.

The Customer Delivery Platforms

Co-operative Bank of Kenya has a successful Universal Banking model and the implementation of Sales Force Effectiveness that has seen the lender serve over six million account holders across all sectors supported by its multichannel strategy that includes 144 Branches, 8,765 Co-op Kwa Jirani Banking Agents and over 570 ATMs.

The lender also has a 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. The Bank has also successfully moved 85 percent of the customer transactions to alternative delivery channels particularly mobile banking, ATMs, internet and Co-op Kwa Jirani banking Agency outlets.

The roots of Co-operative Bank of Kenya

Co-operative Bank does not have roots in Kenya alone. Co-operative Bank of South Sudan is a unique Joint Venture (JV) partnership with Government of South Sudan (Co-op Bank 51 percent and GOSS 49 percent and continues to contribute to the Group’s bottom-line, 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 now involves similar Joint Venture models in other countries notably Rwanda, Uganda, Tanzania, DRC and Ethiopia in the next five years.

The Future of the Banking Sector in Kenya

What is the future of the banking sector in the country? In the past one year, the banking sector in the country has been passing through an ocean of tribulations. It all started with Dubai Bank which was placed under receivership, then came Imperial Bank and finally, what shocked many was the going down of Chase Bank Kenya. Chase Bank Kenya has since recovered. It was only under receivership for only three weeks.

The banking sector in the country is now back on the road. Many banks have now embraced change, competition and are introducing products that appeal to entrepreneurs and all across the population. Most banks are also venturing outside Kenya with Co-operative Bank of Kenya, Equity Ban and Kenya Commercial Banks having established their branches in South Sudan. Equity is in DRC too.

Article by Juma Fred.

About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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