Co-operative Bank of Kenya is projecting a sustained growth in interest income but a material fall in full year net profits for last year on higher provisions for loan defaults.
The lender, which has sustained profits above Sh10 billion since 2015, says ongoing Covid-19 scourge has continued to cause massive disruption on households and businesses and this will require increased loan loss provisioning to reflect this.
“We continue to actively engage our customers to support them through this difficult period, by re-aligning the servicing of loan facilities, their funding and transactional needs as the situation unfolds.
“Loan loss provisions have been much higher than in the previous year in appreciation of the challenges that businesses and households continue to grapple with in meeting their obligations to the bank,” said the lender yesterday.
However, its mainstay lending business remains robust on account of sustained growth in asset base above Sh510 billion, Sh284 billion loan book, over Sh380 billion deposits and 8.8 million customer accounts.
Nine-month net interest income had for instance rose by 11.8 percent to Sh23.64 billion as the bank expanded lending by six percent.
Other lenders that have announced expected material fall in earnings include Standard Chartered, Absa, DTB, I&M Holdings and NCBA.
Co-op bank says its Covid-19 mitigation strategies including a proactive credit risk management project by a global consulting firm, McKinsey will give the business the impetus for sustained growth.