Co-op Bank 2016 profit rises by 15% to Kes 17.7 billion… Now you know where to save your money
The Co-operative Bank Group has recorded a profit before tax of Ksh 17.7 billion for full year 2016 compared to Kshs 15.4 billion recorded in 2015, a 15% growth.
Profit after tax for the Group was Kes 12.7 billion compared to Kshs 11.7 billion in the previous year, representing an 8.5% growth rate.
The good performance in a tough environment is mitigated by the gains from the bold “Soaring Eagle” Transformation Project that the bank has been implementing since 2014 with a clear focus on improvement in operating efficiencies, sales force effectiveness and innovative customer delivery platforms.
Co-operative Group Managing Director and CEO, Dr. Gideon Muriuki, attributed the following Key financial highlights to the Group’s profitability:
1.Profit and Loss
Total interest income grew by 15% from Kshs 42.3 billion on account of; interest income from government securities growth by 40% from Kshs 6.1 billion to Ksha 8.5 billion and interest income from loans and advances growth by 11% from Kshs 30 billion in 2015 to Kshs 33.4 billion in 2016.
Total interest expense reduced by 6% from Kshs 13.6 billion to Kshs 12.8 billion on account of lower cost of funding.
Total operating income grew by 16% from Kshs 36.4 billion to Kshs 42.3 billion.
2.Balance sheet
Total assets grew by Kshs 9.5 million (+3%) to Kshs 352 billion compared to Kshs 342.5 billion in the same period last year.
Net loan and advances book grew by Kshs 23.5 billion (+11%) to Ksh 236.9 billion compared to Kshs 213.4 billion in the same period last year.
Total deposits declined slightly by 2% from Kshs 268.8 billion to Kshs 263.6 billion.
Shareholders’ funds grew from Kshs 50.2 billion to Kshs 61.3 billion, an impressive growth of 22%, supported by the Board of Directors sustained policy to aggressively recapitalize the bank for regional expansion leveraging on retained earnings.
The level of capital enables the Group to double its balance sheet and also finance major corporate deals in the market.
3.Innovative Customer Delivery Platforms
A successful Universal Banking model and the implementation of sales force effectiveness has seen the Group serve 6.2 million account holders across all sectors supported by our multichannel strategy that includes 148 branches , over 8,000 Co-op Kwa Jirani Banking agents and over 580 ATMs.
Key focus on digital banking with the telco Mco-op Cash Mobile Walet has continued to play a pivotal role in growth of non-funded income with over 3,2 million customers.
Through our multi-channel strategy the bank has successfully moved 83% of the customer transactions to alternative delivery channels particularly mobile banking, ATMs, internet and Co-op Kwa Jirani banking agency outlets.
Co-op bank’s unique model of retail banking services through Sacco FOSAs enabled us provide wholesome financial services to over 555 FOSA outlets. The bank has currently issued over 992,000 Sacco line cards.
4.Regional expansion
Co-operative Bank of South Sudan that is a unique Joint Venture (JV) partnership with Government of South Sudan (Co-op Bank 51% and GOSS 49%) made a monetary loss of Kes 498.3 million in 2016 mainly attributed to hyperinflation accounting occasioned by currency devaluation.
5.Corporate Social Responsibility Program
Co-op Bank Foundation has provided scholarship for gifted but needy students from all regions of Kenya. The sponsorship includes; fully paid secondary education, full fees for university education, internships and career openings for beneficiaries. The foundation is fully funded by the bank and has so far supported 5,089 students since the inception of the program in 2007.
6.Accolades
The Group was recognized with two awards at the Banker Africa Awards 2016, as Most Socially Responsible Bank and Best Retail Bank in Kenya. Further, the Group was a big winner at the inaugural Kenya Bankers Association Sustainable Finance Catalyst Award 2016 where we were recognized as 1st in both commercial and MSME Case Studies and 2ns in the category of Best Practice of Sustainable Finance, emerging the 2nd Best overall in Sustainable Financing.
7.Dividend and Bonus shares
The Board of Directors has recommended for approval by the AGM payment of a dividend of Kshs 0.80 per every ordinary share held and also a bonus share issue of one (1) share for every five (5) shares held. The bonus share issue is subject to approval by the Capital Markets Authority.
The Co-operative Bank Group notes that the environment for doing banking business has become progressively challenging, most lately with the enactment of interest rate caps that have clearly slowed down economic growth. The Group will continue to leverage on the strong 6.2 miilion account-holder base, digital banking focus and multichannel access, the basket of innovative finance solutions, and efficient delivery of service to retain market position and deliver business growth and profitability.
