Co-op Bank Bags Ksh 12 Billion In Profits In 6 Months

The Co-operative Bank of Kenya’s profit after tax for the half year ending June grew to 12.1 billion shillings, a rise from 11.5 billion shillings in a similar period last year.

“The Co-operative Bank Group continues to pursue strategic initiatives that focus on resilience and growth in the various economic sectors,” its Group Managing Director (MD) Gideon Muriuki said.

The lender made a marginal 5.9%y/y rise in EPS to KES 2.08 (net income at KES 12.1bn). The uptick follows a 2.3%y/y growth in net interest income to KES 21.5bn while non-interest revenue (NIR) rose 4.0%y/y to KES 13.8bn.

NII was buttressed by a 13.6%y/y leap in interest income from loans and advances to KES 21.0bn, following a 10.7%y/y climb in the loan book to KES 365.4bn.

Yields on loans inched up 0.3 percentage points to 11.9% as that on government securities notched 0.9 percentage points higher y/y to 11.5%. The modest NII growth could be attributed to the 38.9%y/y surge in interest expenses which outpaced the 12.0%y/y rise in interest income. As a result, net interest margins (NIMs) fell 0.4 percentage points to 7.7% from 8.1% in 1H22.

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Weighted average interest rates on deposits were up 0.5%y/y to 3.7% while the major hit came on the interest expense on borrowed funds which jumped 181.3%y/y to KES 2.0bn following the rise in the benchmark LIBOR compared to the prior period. The lender also received USD 100m within half from a DEG-led consortium for on-lending.

NIR was boosted by a 13.3%y/y climb in fees and commissions from loans to KES 6.2bn. Subsequently, NIR contribution rose to 39.1% from 38.7% in 1H22. Contrary to peers, the bank’s income from foreign exchange trading declined 10.0%y/y to KES 1.8bn.

The subsidiary, Kingdom Bank, extended its profitability, with profit before tax climbing 28.6%y/y to KES 521.9m on more than doubling in interest income from loans to KES 426.5m as the loan book grew 72.6% to KES 8.1bn. Notably, the lender has begun paying down a zero-interest 10-year KES 21bn loan it received from the CBK in FY20.

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