Co-operative Bank Group has posted a Profit before Tax of Kshs.13.7 billion for third quarter 2017 compared to Kshs.15.2 Billion recorded in the same period 2016, against the backdrop of a tight operating environment especially with the capping of interest rates and the general economic slowdown in an election year.
Profit after tax for the period was Kshs. 9.5 billion compared to Kshs. 10.5 billion the previous year.
The Group has a sustained focus on long-term profitability, with current challenges in the operating environment being mitigated by the benefits arising from the successful execution of the ‘Soaring Eagle’ Transformation project with a critical focus on improved operational efficiencies, customer service and lower operating costs.
As a result, our Cost to Income ratio continues to improve from 52.1% in FY2016 to 47.6% in the third quarter 2017.
Key financial highlights include:
Balance sheet
- Total assets grew by Kshs 34.2 billion (+9.7%) to Kshs. 388.3 billion compared to Kshs 354 Billion in the same period last year.
- Net loans and advances book grew by Kshs 32.4 Billion (+14.2%) to Kshs. 259.4 billion compared to Kshs. 227 billion in the same period last year.
- Customer deposits grew by Kshs. 31.2 billion (+12.1%) to Kshs. 289 billion compared to Kshs. 257.8 billion in the same period last year.
- Shareholders’ funds grew from Kshs. 59.2 billion to Kshs. 67.3 billion, an impressive growth of 13.8%, supported by a steady growth in earnings retention and a dividend policy anchored on progressive growth.
Profit & Loss
- Total interest income reduced by 7.7% from Kshs 32.3 billion in 3Q2016 to Kshs 29.9 billion in 3Q2017.
- Total interest expense reduced by 8.5% from Kshs 9.9 billion in 3Q2016 to Kshs 9.1 billion in 3Q2017 on account of reduced cost of funding.
- Total operating income reduced marginally by 4.3% from Kshs 32.3 billion in 3Q2016 to Kshs 30.9 billion in 3Q2017.
- Interest income from loans & advances declined by 6.9% despite the 14.2% increase in net loans & advances.
- Total operating expenses increased marginally by 0.7% from Kshs.17.15 billion to Kshs17.25 billion.
Innovative Customer Delivery Platforms
- A successful Universal Banking model and the implementation of Sales Force Effectiveness has seen the Group serve 6.8 million account-holders across all sectors supported by our multichannel strategy that includes 149 Branches, over 10,000 Co-op Kwa Jirani Banking Agents and over 580 ATMs.
- The all-telco Mco-op Cash Mobile Wallet has continued to play a pivotal role in the growth of non-funded income with over 3.46 Million customers.
- Through our multi-channel strategy the Bank has successfully moved 86% of customer transactions to alternative delivery channels particularly mobile banking, ATMs, internet and Co-op Kwa Jirani bank agency outlets.
- Our unique model of retail banking services through Sacco FOSAs enabled us provide wholesale financial services to over 560 FOSA outlets. The bank has currently issued over 1 Million Saccolink cards.
- We continue with our focus on Digital Bank which will ensure timely, business-led solutions delivery to our customers.
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%) made a profit of Kshs. 30 Million in the period under review despite the tough operating environment.
New Business – Co-op Bank/Super Group Leasing Joint Venture
In the second quarter, Co-operative Bank entered into a Leasing business joint venture agreement with Super Group Limited, an established leader in leasing business that is listed on the Johannesburg Stock Exchange.
The joint venture will take advantage of key strengths by the two partners and focus on the emerging opportunities in leasing business with the bank providing the customer base and Super Group providing proven products, technology and expertise on the running of a scalable leasing business.
One prime opportunity arising from the “Soaring Eagle Transformation Agenda” is a focus on growing the top-line by Sales Force Effectiveness aimed at increasing product-holding per customer, and revenues.
The joint venture comes at a time when there are significant market opportunities in the growing Kenyan economy and the region as hereunder:
- Major infrastructure projects.
- Government setting the pace with leasing, especially vehicles.
- Exploration and mining activities including oil and gas.
- Other sector demands including manufacturing, construction, transport, ICT among others.
The joint venture will also leverage on the support of the Co-operative movement with over 14 Million members and over 22,000 co-operative societies.