Co-op Bank: Leads with Ksh8 Billion in Profits in 2023 First Quarter

Co-op Bank Group is pleased to report a Profit Before Tax of Kshs.8.15 Billion for the 1^st quarter of 2023. That represents a 4.67% growth compared to Kshs.7.78 Billion recorded in the 1^st quarter of 2022. It means, after tax, a profit of Kshs.6.1B compared to Kshs.5.8B reported in 2022. That’s a 5.2% growth.

The strong performance by the bank is in line with the Group’s strategic focus on sustainable growth, resilience, and agility.

Key Performance highlights:

Financial Position

The Group has registered sustained growth as follows.

• Total Assets grew to Kshs.631.1 Billion, a 5.7% growth from Kshs597.0 Billion in the same period last year.
• Net loans and advances grew to Kshs.360.1 Billion, an 11% growth from Kshs.324.5 Billion in 2022.
• Customer deposits grew to Kshs419.8 Billion, a 2.2% increase from Kshs.410.8 Billion.
• External funds from development partners have increased by 12% to Kshs.48.4 Billion from Kshs.43.3 Billion in 2022.
• Shareholders’ funds have grown to Kshs.112.6 Billion, a 9.7% increase from Kshs.102.7 Billion in 2022.

Comprehensive Income

• Total operating income grew by 6.5% from Kshs.16.8 Billion to Kshs.17.9 Billion.
• Total non-interest income grew by 10.8% from Kshs.6.4 Billion to Kshs.7.1 Billion.
• Net interest income grew by 3.9% from Kshs10.4 Billion to Kshs10.8 Billion.
• Total operating expenses increased by 8.8% from Kshs.9.0 Billion to Kshs.9.8 Billion

Cost Management

The Group reports considerable efficiency gains from the various initiatives to record a Cost-to-Income Ratio of 46.3% in Q12023, a remarkable improvement from 59% in FY2014 when we began our Growth & Efficiency journey.

Credit Management remains a key focus area, with the Group prudentially making provisions of Kshs. 1.5 Billion which has enhanced the Bank’s Loan Loss Reserve/Coverage levels to a high of 72% from 69% in 2021.

A Strong Digital Footprint

• Through our digital channel strategy, the Bank has successfully moved 91% of all customer transactions to alternative delivery channels, a 24-hour contact centre, 543 ATMs, mobile & internet banking and over 17,000 network of Co-op kwa Jirani agents.
• Key focus on digital banking, with the all-telco MCo-op Cash Mobile Wallet continuing to play a pivotal role in the growth of non-funded income with 5m customers registered and loans worth Kshs19.2 Billion disbursed in quarter one of 2023, averaging over Kshs.6.4 Billion per month.
• We have successfully migrated our customers to the Omni-channel, integrating accessibility and user experience. Our omni-channel interfaces online banking through personal computers, mobile phones and USSD.
• Over 174,000 customers have taken up the MSME packages that we rolled out in 2018, and 36,517 have been trained on business management skills.
• Our unique model of retail banking services avails access to cash for FOSA operations, enabling 484 FOSA outlets to support over 15 Million Sacco members access banking services even in rural/remote areas.

Wide Branch Network

The Bank has strategically grown its branch network to 187 Branches (4 in South Sudan). Three new branches (Kenol-Makuyu, Hindi and Bamburi) have been opened in 2023, whereas 5 Branches (Kabarnet, Iten, Kasarani, Kamakis and Chwele) were opened last year.

Subsidiaries

• Co-op Consultancy & Bancassurance Intermediary Ltd posted a Profit Before Tax of Kshs336.4 Million in Q12023, riding on strong penetration of Bancassurance business.
• 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 Profit before tax of Kshs110 Million in Q12023. This performance however translated to a monetary loss of Kshs71.3 Million attributable to hyperinflation accounting occasioned by currency devaluation of the South Sudanese pound.
• Co-op Trust Investment Services Ltd contributed Kshs.51.2 Million in Profit Before Tax in Q12023, with Funds Under Management of Kshs.194 Billion compared to Kshs.190.2 Billion in Q12022.
• Kingdom Bank Limited (A Niche MSME Bank) has contributed a Profit before Tax of Kshs.256.3 Million in Q12023.

External funds from development partners

The Bank signed a KShs.12.6 Billion long-term Credit Agreement with global Institutional investors led by the German fund, Deutsche Investitions – und Entwicklungsgesellschaft (DEG). The fund will strengthen the bank’s capital base and support lending to MSMEs. The facility was drawn in April 2023.

Robust Environmental Social and Governance (ESG) Practice

The Bank continues to implement a state-of-the-art ESG policy framework leveraging on an enhanced ESG implementation roadmap, group wide ESG champions and ESG Governance.

• Co-op Bank Foundation, the Group’s social investment vehicle, continues to provide Scholarships to gifted but needy students from all regions of Kenya. The foundation is fully funded by the bank and has supported 10,264 students since inception.
• Co-op Bank Capacity-building & Technical Assistance Fund for Farmers’ Co-operatives which has a dedicated Kshs.100 Million Fund is aimed at capacity-building, technical support and digitization for farmers’ co-operatives.

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