The Co-operative Bank of Kenya has recorded a Sh18.2billion profit before tax for the half-year period ending June 30, 2024 representing a 10.7 per cent growth compared to the Sh16.4 billion recorded in the same period in 2023.
This translates to a profit after tax of Sh13billion, up from Sh12.1billion reported in 2023.
According to the tier one lender, this is based on higher income and customer deposits.
The Nairobi Securities Exchange (NSE) listed bank’s strategic focus on sustainable growth saw a 22.1 per cent Return on Equity (RoE), underscoring its strength in the market. Customer deposits grew even more significantly, rising to Sh507.4billion, a 9.4 per cent increase from Sh463.9billion, further strengthening the bank’s liquidity position.
Group Managing Director and Chief Executive Officer (CEO) Gideon Muriuki, said the lender’s total assets grew to Sh716.9 billion, marking a 7.8 per cent increase from Sh664.9billion posted in the same period last year.
“The group reports excellent efficiency gains from the various initiatives to record a Cost-to-Income Ratio of 46.6 per cent in 1H 2024 from 59 per cent in FY2014 when we began our Growth Efficiency journey. During that period, net loans and advances surged, reaching Sh375.6 billion, a 2.8 per cent growth from Sh365.4 billion in 2023.” He said.
The bank continues to leverage its new core banking system to support its digital strategy, which has seen over 93 per cent of all customer transactions move to alternative delivery channels.
This shift to digital channels has improved customer experience and contributed to the bank’s cost-efficiency.
According to Muriuki, the Mco-op Cash Mobile wallet continues to drive substantial non-funded income streams. In the first half of 2024 alone, the bank disbursed Sh36.4billion in loans through the mobile platform, averaging Sh6.1billion per month.
This platform has become a critical tool for the bank, enabling it to reach a broader customer base and offer convenient financial solutions.
The bank’s shareholders benefited from this growth, with shareholders’ funds increasing to Sh126. billion, a 17 per cent rise from Sh108.3billion in 2023.
This growth was driven by strong retained earnings of Sh15.1billion, reflecting the bank’s ability to generate and retain profits effectively.
Total operating income for the period grew by 10.9 per cent, from Sh35.4billion to Sh39.2billion, while total operating expenses also increased by 11.1 per cent, from Sh19.1billion to Sh21.3billion.
Despite the rise in expenses, the bank’s income growth outpaced the increase in costs, highlighting its operational efficiency and ability to manage expenses effectively. \
In the first half of 2024, Co-operative Bank disbursed Sh7.5billion to MSMEs through its Mobile E-Credit solution, with MSMEs now accounting for 15.9 per cent of the total loan book.
This support for small businesses is a testament to the bank’s commitment to driving economic growth at the grassroots level. Co-op Bancassurance Intermediary Ltd also posted strong results, with a Profit Before Tax of Sh682.7million in the first half of 2024, driven by strong penetration of the bancassurance business.
Meanwhile, Co-operative Bank of South Sudan, a unique joint venture with the Government of South Sudan, recorded a profit before tax of Sh264.3 million.
However, this was offset by a monetary loss of Sh252.4 million due to hyperinflation accounting, caused by the devaluation of the South Sudan Pound.
Co-op Trust Investment Services Ltd contributed Ksh142.7million profit before tax in the half first of 2024 compared to Ksh106.8 million in the same period last year, a commendable 33.7 per cent growth.
The Subsidiary has funds under management of Ksh231.3billion. Kingdom Bank Limited, a niche MSME bank, contributed a gross profit of Ksh635.5million in the period to June 2024, a remarkable growth of 21.8 per cent from Ksh521.9million in 2023.
