The Cooperative Bank of Kenya posted a 7.7 percent growth in net profit to Sh6.58 billion in the first three months ended March 2024 thanks to increased income and containment of operating costs.
The growth in net profits from Sh6.11 billion recorded in the same quarter last year came on the back of net interest income growing by 8.6 per cent to Sh11.7 billion.
Non-interest income was relatively unchanged at Sh7.08 billion in the quarter under review, compared to Sh7.09 billion in the previous corresponding quarter.
“The bank’s strong performance is in line with the group’s strategic focus on sustainable growth, agility and resilience,” said Gideon Muriuki, Managing Director at Co-op Bank.
The Co-operative Bank's operating expenses rose marginally by 0.5 per cent to Sh9.86 billion from Sh9.82 billion, improving the group's cost-to-income ratio to 44.1 per cent compared to 46.3 per cent in the quarter ended March 2023.
The lender increased its provision for loan defaults by four per cent to Sh1.59 billion while staff costs rose by 12.7 per cent to Sh4.46 billion on the back of salary increases and hiring of new staff as it opened eight new branches.
The Co-operative Bank, which last year hired 536 employees, opened two new branches this year and plans to add 13 more before the end of the year, which could lead to more hiring.
“The bank continues to invest in a competitive team that is ready to work on existing functions while simultaneously exploiting new growth opportunities in all areas of the business,” Mr. Muriuki said.
The cooperative's performance has also helped subsidiaries. Kingdom Bank, which is 90 per cent owned by Co-op Bank, saw its net profit for the quarter ending March 2024 rise by 33 per cent to Sh341.7 million from Sh256.3 million recorded in a similar period last year.
Co-op Consultancy & Bancassurance Intermediary Limited recorded a pre-tax profit of Sh305 million, with the Cooperative Bank of South Sudan returning a pre-tax profit of Sh110 million, resulting in a cash loss of Sh71.3 million when adjusted for hyperinflation.
Co-op Trust Investment Services Limited recorded pre-tax profit of Sh75.5 million from Sh51.2 million, representing a growth of 47.6 percent. The subsidiary's funds under management stood at Sh227.2 billion compared to Sh194 billion at the end of March last year.
The group's total assets grew by 13.2 per cent to Sh714.7 billion while net loans and advances to customers rose by five per cent to Sh378.1 billion.
Customer deposits rose to Sh481.8 billion from Sh419.8 billion, recording an increase of 14.8 percent. The review period saw external funds from development partners grow by 24 percent to Sh60.1 billion.
Co-op Bank will on Friday hold its annual general meeting where shareholders are expected to approve a dividend of Sh1.50 per share worth Sh8.8 billion proposed by the board last month.
Shareholders registered in the bank’s share registry until the end of April 29 will receive the dividends. The majority shareholder, Co-op Holdings Co-operative Society Limited, will receive Sh5.68 billion on its 64.56 per cent stake.