Co-op Bank Group has posted an 11 per cent drop in profit before tax on escalating loan defaults caused by the Covid-19 pandemic.
It reported a Sh13.8 billion profit before tax for the third quarter of 2020 compared to Sh15.5 billion recorded in the third quarter of 2019.
Loan loss provisions jumped by 90 per cent from Sh2.1 billion in 2019 to Sh4.0 billion.
By the end of September, a total of Sh46 billion in loans had been restructured.
“The restructuring was in appreciation of the challenges that businesses and households are grappling with from the disruption occasioned by the ongoing pandemic,” the bank’s MD Gideon Muriuki said.
The bank’s balance sheet expanded with total assets rising by Sh70 billion to Sh510.9 billion compared to Sh440.8 billion in the same period last year.
It issued Sh15 billion more loans in the third quarter to hit Sh284 billion up from Sh268.9 at the same period last year.
The lender said its subsidiary Kingdom Bank formerly known as Jamii Bora acquired at a cost of Sh3 billion will break-even next year.
The tier one lender packed 50 per cent more money in government securities as the Coronavirus dust storm swept the business environment.
Investment in government securities grew by Sh47.7 billion to Sh142.3 billion compared to Sh94.6 billion in 2019.
Deposits grew by 16 per cent to Sh375.5 billion as customers sought safety for their cash in banks.
Muriuki said about 90 per cent of their transactions have moved online and through agents.
“The bank has successfully moved over 90 per cent of all customer transactions to alternative delivery channels, a 24-hour contact centre, mobile banking, 584 ATMs, internet banking and over 17,700 Co-op Kwa Jirani banking agents,” Mr Muriuki said.
Co-op is investing in digitisation to cut costs and reduce the risk of Coronavirus infections to its staff.
Total non-interest income which represents fees and commissions declined by 4 percent from Sh14.1 billion to Sh13.6 billion.