Co-operative Bank Group has reported Sh11.5 billion net profit compared to Sh7.4 billion net profit in the same period in 2021.
This, according to the bank, was due to the economy struggling to recover from the effects of the Covid-19 pandemic and majorly depended on high borrowing and increased government investment.
This was primarily due to the significant decrease in loan loss provisions.
“The profits were anchored on a successful universal banking model supported by an innovative digital presence, a wide physical footprint, nine million customers, and unique synergies. There were excellent gains from our various initiatives with a cost-to-income ratio of 46 per cent in the second quarter, 2022 from 59 per cent in full year 2014 when we began our ‘Growth and Efficiency’ journey,” Co-op Bank Chief Executive Gideon Muriuki revealed while announcing the group’s performance for the six months of the year.
The lender’s owners, who are primarily cooperative societies, received Sh24.20 from the most recent profit for every Sh100 they invested in the business.
With total operating expenses increasing marginally by 2.5 per cent from Sh18.7 billion to Sh19.2 billion, the bank’s identical strategy of increasing income while reducing expenses allowed it to post one of the fastest growths in profit among the major banks who continue to release their financial results for the first half of 2022.
The Co-operative Bank of South Sudan, a joint venture between the lender’s subsidiaries and the Government of South Sudan, has signaled profitability in the quarter, recording a profit of Sh55.5 million compared to a loss of Sh290.1 million in the same period a year earlier.
Muriuki claimed that the organisation is still working on strategic plans that emphasise the expansion and sustainability of many economic sectors.
The enhanced performance spurred growth in total assets along with an increase in comprehensive income, providing shareholders—the majority of whom are co-operative movement members with a competitive return on equity of 24.2 per cent. The group’s stake in government securities increased to Sh183.2 billion, up from Sh182 billion in 2021, like most banks.
The lender’s total pretax profit for the second quarter ended in June 2022 accumulated to Sh15.3 billion with the overall assets of Co-op increasing by 5.4 per cent to Sh603.9 billion in the first half of the year from Sh573 billion during the same period in 2017.
Net loans and advances increased to Sh330 billion, up 9.6 per cent from Sh301.2 billion the previous year.
The company reported that while non-interest income soared to Sh13.3 billion, net interest income climbed by 11.8 per cent from Sh18.8 billion to Sh21.1 billion.
As the listed bank continues to implement its credit quality and growth initiatives, which have lead to improvements in loan book quality, Muriuki claims that management will remain a significant area of attention.
In the review period, loan income increased by 11.8 per cent, from Sh18.8 billion to Sh21.1 billion.
“We indicated improving quality of our asset book as businesses and households continue to recover from the impact of Covid-19 pandemic,” Muriuki stated.
A total of Sh3.3 billion was given to businesses and households thanks to Co-op’s improved credit management, down from Sh4.2 billion in 2021.
Operational costs Micro, small, and medium-sized businesses (MSMEs) account for 16 per cent of the Co- op’s entire loan book. The MSME packages that the bank launched in 2018 through the Mobile E-Credit solution have been utilised by over 162,000 customers.
Additionally, the bank increased its loan book by 9.6 per cent to Sh330 billion during the review period, indicating that the economy is improving as more borrowers used loans to launch or grow their enterprises.
The results are in accordance with the group’s strategic focus on resilient, agile, and sustainable growth.