Coop Bank first quarter profit up on double-digit customer loan growth

A double digit loan growth to the private sector has handed Cooperative Bank a five percent jump in net profits to Kes6.1 billion in the three months to March this year up from Kes5.8 billion in a similar period last year.

Coop Bank saw customer loans jump 11 percent to Kes360.1 billion up from a growth of 8 percent in a similar period last year. Increased private sector loans saw the bank earn Kes10 billion in interest income up from Kes8.9 billion last year.

The lender also made extra money from fees and commission on loans of Kes3.3 billion up from Kes2.5 billion in the first quarter of 2022.

Banks are shifting back loans to customers in the private sector as the Central Bank of Kenya raises interest rates discounting long dated bonds.

Co-op retained marginal growth in its income from trading government securities earning Kes5.1 billion up from Kes4.9 billion last year.

Overall, the bank made an operating income of Kes17.8 billion, one billion more than last year against Kes791 million rise in expenditure to Kes9.8 billion after the lender retained its loan loss provision costs.

Despite a rise in gross non performing loans to Kes55.6 billion, Coop increased coverage levels on potential defaults to a high of 72 percent from 69 percent in 2021 with a Kes1.5 billion allocation in provisions this quarter.

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Keeping the cost of bad loans low has been crucial in bringing down the lenders cost to just 46 shillings of every one hundred earned.

“The group reports considerable efficiency gains from the various initiatives to record a Cost-to-Income Ratio of 46.3 percent in Q12023, a remarkable improvement from 59 percent in FY2014 when we began our Growth and Efficiency journey,” Co-op Bank CEO and Group Managing Director Gideon Muriuki said.

The Group has registered sustained growth in total assets to Kes631.1 billion, a 5.7 percent growth from Kes597.0 billion even as customer deposits grew to Kes419.8 billion, a 2.2 percent increase from Kes410.8 billion.

The bank has integrated customer experience through their new omnichannel interfaces  connecting online banking through personal computers, mobile phones and USSD availing our services to all customers through their preferred channel yet retain the same experience from wherever they are, driving uptake of digital channels.

Co-Op says 91 percent of all customer transactions to alternative delivery channels, a 24-hour contact centre, 543 ATMs, mobile and internet banking and over 17,000 network of Co-op kwa Jirani agents, offering customers convenience while cutting operational costs.

Despite this huge push online, Co-op has retained its growing branch network strategically grown to 187 Branches (4 in South Sudan).

Co-Op opened three new branches (Kenol Makuyu, Hindi and Bamburi) in 2023, whereas 5 Branches (Kabarnet, Iten, Kasarani, Kamakis and Chwele) were opened last year.

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