Co-operative Bank of Kenya has registered Sh4.98 billion net profit in the first quarter.
This comes despite growth in interest income as the bank increased provisioning for loan defaults 2.5 times to Sh2.3 billion in a pandemic environment.
The net earnings for the three months to March 2021 were 3.6 per cent lower than the Sh3.59 billion posted in a similar period last year.
In a statement, Coop Bank Group chief executive Gideon Muriuki said the increased provisioning for loan defaults saw total operating expenses rise by 27 per cent to Sh9.3 billion.
“The Group prudentially increased loan loss provisions to Sh2.3 billion in the first quarter of the year in appreciation of the challenges that businesses and households continue to face due to the economic effects of the ongoing pandemic,” he said.
The first quarter financials shows that total operating income increased by 15 per cent from Sh2.5 billion to Sh14.4 billion while total non-interest income declined from Sh4.98 billion to Sh4.52 billion on account of fee waivers on economic slowdown.
This highlighted strong earnings from the mainstay business of lending amid the pandemic environment.
Within that period, total assets grew by Sh82.5 billion to Sh553 billion from Sh470 billion same period last year while the net loan and advances hit Sh298.2 billion from Sh276.2 billion.
Co-op’s non-interest income declined by nine per cent to Sh4.52 billion on account of fee waivers on transactions and the general economic slowdown.
Co-op loan book grew by 8 per cent or Sh22 billion to Sh298.2 billion during the review period.
Customer deposits grew by 16 per cent to Sh393.8 billion, mostly being non-interest bearing deposits, giving the lender a rich pool from which to issue credit.
Muriuki said that a total of Sh49 billion in loans have been restructured to support customers impacted by the pandemic.
“We continue to actively engage our customers to support them through this period, by re-aligning the servicing of facilities, funding and transactional needs as the situation unfolds,” said Muriuki.
The group’s subsidiary Co-op Consultancy and Insurance Agency posted Sh262.6 billion profit before tax as at 31st Mar 2021, leveraging bancassurance business.
The South Sudan joint venture, in which it owns 51 per cent stake, returned a monetary loss of Sh89.1 million due to hyperinflation accounting to reflect devaluation of the South Sudanese pound.
Kingdom Bank Limited managed Sh126.7 million profit before tax compared to 2020 full year loss of Sh124 million.
Co-op Bank holds a controlling 90 per cent equity interest in Kingdom Bank, which is a fully-fledged commercial bank with over 444,000 customers in 17 branches.
Co-op Trust Investment Services contributed Sh21.3 million pre-tax profit as funds under management grew by 21 percent to Sh128.4 billion.