Co-op Bank higher incomes and new Jamii Bora millions spur profit to Ksh 12 billion

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By Bernard Matumbai

The Co-operative Bank of Kenya did well to record an 18.9 percent in net profit in the nine months to September 30, 2021 on what Managing Director and Chief Executive Officer Dr Gideon Muriuki attributes to higher interest and non-interest income.

More interestingly, the impressive performance arguably exceeds the bank’s pre-Covid-19 performance and is in line with the Co-op Bank’s strategic focus that supports growth, resilience and agility.

According to the financial results released November 18, Co-op Bank group’s total assets grew by Ksh82 billion to Ksh593 billion compared to Ksh511 billion – a 16 percent increase – in the same period last year.

During the period under review, net income in stood at Ksh11.6 billion, up from Ksh9.7 billion in 2020’s corresponding review period.

In yet another impressive feat, the bank saw its interest on income jump to Ksh39.5 billion, a 21.5 percent rise, with the tier one lender expanding its loan book and investment in government debt paper.

During this period, the bank’s customers had all reason to smile, seeing as they did, their loan portfolio increasing by 7.7 percent to a mouthwatering Ksh306.3 billion. Still, Co-op Bank’s investment in treasuries rose more than half, at 56 percent to Ksh193.3 billion.

Unlike the competition that favoured squeezing provisions for bad and doubtful debts, Co-op Bank went against the grain to double its provisions to Sh6 billion, a clear manifestation of the MD’s wager on credit management.

On a different front, the bank’s deposit portfolio increased 12 percent to Ksh420.4 billion, with corresponding interest expenses increasing 22 percent to stand at Sh11 billion.

The return to profitability of Kingdom Bank, a Co-op Bank subsidiary that hitherto traded as Jamii Bora Bank, then a struggling entity before Dr Muriuki and his team came knocking, played a significant part in the mother bank’s collective earnings.

During the period under review, Kingdom Bank posted Ksh413 million in net profit – a revolutionary turnaround, to say the least. A serial loss-making entity then, Jamii Bora would get a major reprieve in August 2020 when Co-op Bank acquired a controlling stake in the ailing lender.

Other Co-op Bank subsidiaries that raked in notable income include Co-op Trust Investment Services that contributed Ksh92.3 million with funds under management standing at Ksh187.1 billion and Co-op Consultancy & Bancassurance Intermediary Limited that yielded Ksh648 million pretax profit.

Perhaps the only blot on the Group’s portfolio was Co-operative Bank of South Sudan, a partnership with Government of South Sudan that returned a monetary loss of KSh104 million in the period under review, in what the bank attributes to hyperinflation accounting occasioned by currency devaluation of the South Sudanese pound.

With a robust digital footprint to its credit, Co-op Bank’s multi-channel strategy saw the bank has successfully moving a massive swathe of all customer transactions to alternative delivery channels, backed by an expanded 24-hour contact centre, mobile banking, 589 ATMs, internet banking and over 23,000 Co-op Kwa Jirani agency banking terminals.

The latest financial results continue to add to Co-op Bank’s exploits on the financial markets – both locally and globally. Only the other day, Dr Muriuki was feted for paying dividends and retaining workers despite the adverse effects of the Covid-19 pandemic.

The Co-op Bank CEO was recently named Best Bank CEO in Africa at this year’s African Banking Awards for his efforts including, turning around Co-operative Bank from a loss-making lender into a profitable one.

The awards, which recognise corporate leaders and financial institutions who through sound

leadership continue to increase profitability , deliver affordable credit to the retail and wholesale markets as well as support local and transnational entities to do business, are organised by EMEA Finance.

It is worth noting that Co-op Bank was among the few lenders that paid out dividends when there was a freeze in dividend payout in the financial industry. This year’s awards had a unique perspective in light of the pandemic. The Co-op Bank Group chief executive was recognised for implementing key strategies to address challenges facing both businesses and households.

In essence, Dr Muriuki was recognised for the decision to sustain the payment of dividends to shareholders despite Covid-19, which offered critical relief and support to the over 15 million-member cooperative movement.

Further to that the award recognised dr Muriuki’s decision not to retrench staff, instead, retaining them at the height of the pandemic . The awards also recognised the successful acquisition and stabilisation of Jamii Bora Bank (now Kingdom Bank) as it offered much-needed stability to the local financial sector.

The EMEA Awards also awarded the Best Bank in Kenya Award to the Co-operative Bank, and the Best Asset Manager award to Co-opTrust Investment Services Ltd, a subsidiary of Co-operative Bank.