The Kenya Cooperative Bank posted a 4.4 per cent growth in net profit to Sh19.2 billion in the nine months to September 2024, due to higher interest and non-interest income.
The growth in earnings from Sh18.39 billion recorded in the corresponding period last year was driven by a 12.3 per cent increase in net interest income to Sh36.87 billion, and an 8.2 per cent increase in non-interest income to Sh22.28 billion. .
“The bank’s strong performance is in line with the group’s strategic focus on sustainable growth, agility and flexibility, delivering a return on equity of 21.3 percent thanks to its ‘Soaring Eagle’ transformation agenda,” said Gideon Muriuki, Managing Director at Co. -Bank.
The bottom line improvement came despite a 12.7 percent rise in operating expenses to Sh32.68 billion, mainly due to higher loan loss provisions and higher spending on employee salaries.
Loan default provisions rose by a third to Sh5.6 billion, while staff costs rose by 10.8 percent to Sh13.5 billion to reflect salary increases and the hiring of additional staff for the expanded branch network.
The association’s branch network expanded by 11 branches to reach 204 branches, compared to 193 outlets at the end of September last year. Between the two periods, the Co-op’s headcount increased by 368 employees to close in September with 5,617 employees.
The lender, which is targeting an additional 15 outlets this year, has already opened eight branches spread across Co-op Bank Kenya, Kingdom Bank and Co-op Bank South Sudan.
For example, the cooperative has opened branches in Imara Mall in Nairobi, Ogunga in Siaya and Luanda in Vihiga County. Kingdom Bank recently opened a branch in Meru District, its third branch this year.
Kingdom Bank, which is 90 per cent owned by the Cooperative Bank, saw its net profits decline by 23 per cent to Sh603 million due to higher tax liabilities. Profit before tax rose 14.5 per cent to Sh897.7 million.
Co-op Consultancy & Bancassurance Intermediary Limited recorded pre-tax profit of Sh824.3 million, representing growth from Sh762.9 million, as a result of increased penetration of its bancassurance business.
The Cooperative Bank of South Sudan returned a pre-tax profit of Sh434.7 million before adjustment for hyperinflation, compared to Sh246.9 million in the previous corresponding period.
Co-op Trust Investment Services Limited contributed Sh254.9 million to pre-tax profits, representing growth from Sh154.5 million as the subsidiary’s funds under management grew by 52.8 per cent to close the period at Sh299.6 billion.
The group’s cost-to-income ratio rose to 45.8 percent from 46.4 percent, indicating improved efficiency.
Total assets grew by 13.5 per cent to Sh750.8 billion, while customer deposits increased by 18.7 per cent to Sh514 billion. Shareholders’ funds recorded an increase of 22 per cent to Sh131.8 billion on the back of higher retained earnings.