Co-op Bank achieves Nine billion Profit (Before Tax) between January and April 2024

Co-op Bank is pleased to report a Profit Before Tax of Kshs.9.01B for Q1 2024, a commendable 10.6% growth compared to Kshs. 8.15B recorded in Quarter 12023.

This represents a Profit after Tax of Kshs.6.5B compared to Kshs.6.11B reported in 2023.

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 strong growth as follows:

  • Total Assets grew to Kshs.714.7B, a 13.2% growth from Kshs631.1B in the same period last year.
  • Net loans and advances grew to Kshs.378.1B, a 5% growth from Kshs.360.1B in 2023.
  • Customer deposits grew to Kshs.481.8B, a 14.8% increase from Kshs. 419.8B.
  • External funds from development partners grew to Kshs.60.1B from Kshs.48.4B in 2023.
  • Shareholders’ funds have grown to Kshs.127.1B, a 12.9% increase from Kshs.112.6B in 2023.

Comprehensive Income

  • Total operating income grew by 5.1% from Kshs.17.9B to Kshs.18.8 B.
  • Total non-interest income remained stable to stand at Kshs.7.1B similar to performance recorded a year ago.
  • Net interest income grew by 8.6% from Kshs 10.8B to Kshs 11.7B in 2023.
  • Total operating expenses increased marginally by 0.5% from Kshs 9.8B to Kshs.9.9B.

Cost Management

The Group reports excellent efficiency gains from the various intiatives to record a Cost-to-Income Ratio of 44.1% in Q12024 from 59% in FY2014 when we began our Growth & Efficiency journey.

A Strong Digital Footprint

A New Core Banking System, presenting opportunity for growth and enhanced efficiency.

  • The Bank continues to leverage the new core banking system (latest version of Finacle from Infosys, one of the best-rated platforms globally), to support the Group’s digital synergy.
  • The system will further enhance service excellence and provide innovative and advanced banking solutions.
  • Through our digital channel strategy, the Bank has successfully moved over 93% of all customer transactions to alternative delivery channels, a 24-hour contact centre, 605 ATMs & Cash Deposit Machines (CDMs), mobile & internet banking and over 16,000 network of Co-op kwa Jirani agents.
  • Our Omni-channel platform continues to offer users accessibility and enhanced experience. The platform interfaces online banking through personal computers, mobile phones and USSD availing our services to all customers through their preferred channel yet retain the same user experience from wherever they are.
  • MCo-op Cash Mobile wallet continues to drive substantial non-funded income streams with Kshs18.1B in loans disbursed in Q12024, averaging Kshs.6.0B per month.
  • Over 214,000 customers have taken up the MSME packages we rolled out in 2018, and 60,850 have been trained on business management skills. In Q12024, we disbursed Kshs.3.9B to MSMEs through our Mobile E-Credit solution.
  • MSMEs make up 15.6% of our total Loan Book.

Our unique model of retail banking services avails access to cash for FOSA operations, enabling 484 FOSA outlets to support over 15M Sacco members access banking services even in rural/remote areas.

Wide and Expanding Branch Network

The Branch network has expanded to a total of 195 outlets (4 in South Sudan). We have planned 15 additional outlets in 2024 – with 2 at lmaara Mall on Mombasa Road-Nairobi and Ugunja in Siaya already opened.

Our Subsidiary, Kingdom Bank, opened a new Branch in Gikomba, aligning perfectly with the Bank’s strategic vision to serve markets where Kingdom Bank has niche expertise notably MSMEs.

A Growing Team

The Bank continues to invest in a competitive team set to serve existing functions at the same time tap new growth opportunities across all areas of the business.

Staff numbers have grown from 4,864 as at the close of 2022 to 5,361 – creating job opportunities for over 497young people.

Subsidiaries

  • Co-op Bancassurance Intermediary Ltd posted a Profit Before Tax of Kshs.305M in Q12024, 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 BeforeTax of Kshs.128.5M in Q12024 compared to a loss of Kshs.71.4M in Q12023.
  • Co-op Trust Investment Services Ltd contributed Kshs.75.5M Profit Before Tax in Q12024 compared to Kshs.51.2M in Q12023, a 47.6% growth. The Subsidiary has Funds Under Management of Kshs.227.2B.
  • Kingdom Bank Limited (AnicheMSME Bank) contributed a Profit Before Tax of Kshs.350.3M in Q12024, a remarkable growth of 33.9% fromKshs.261.5M reported in Q12023.

Long Term Financing: Women-owned/managed MSMEs

The Bank has secured a long-term loan of $25M from DEG – a subsidiary of KfW Group, for micro, small and medium-sized enterprises (MSMEs) that are managed or owned by women.

This is aligned to the Bank’s contribution to the achievementof the global Sustainable DevelopmentGoals (SDGs).

Commitment to Sustainability

In 2022, the Bank embarked on an enhanced Environmental, Social and Governance(ESG) road map to integrate ESG considerations into its operations with several key milestones achieved.

The Bank’s commitment to ESG excellence was celebrated at the 2023 Kenya Bankers’ Sustainable Finance Catalyst Awards, with the bank emerging as the Overall Award Winner.

This was the fourth win by the Bank since the inception of the award six years ago.

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 sponsorship includes fully paid secondary education, full fees for University education,Internships,and career openingsfor beneficiaries.

The foundation is fully funded by the bank and has supported 10,264 students since the inception of the program.

Conclusion

The Co-operative Bank Group continues to pursue strategic initiatives that focus on resilience and growth in the various economic sectors.

This is anchored on a successful universal banking model supported by an innovative digital presence, a wide physical footprint, and the unique synergies in the over15-million-member co-operative movement that is the largest in Africa.

We are you.

Milestone: How Does it Feel to Buy and Drive your First Car?

A man buying their first car is a milestone that feels straight out of this world. Do not for a moment equate that to bourgeois issues like a man’s first love or kiss.

The first time you get in your car. How does it smell? You run your fingers through the textures. Leather? Fabric?

You start it – let it idle for a few minutes as you bask in pure awe that you finally got to own one.

Then, you drive it. You go fast. You go over the speed limit the very first time. You make the engine roar with unnecessary raves – and think “Wow! I can’t believe this is happening!”

Content Creators Njugush and wife Celestine pose with a newly acquired Matatu van. (Photo: Njugush)

You spend hours sitting in that car, chatting up friends.

Any chance you get to reverse, you subconsciously become your father: Ignore the mirrors, drape your hand over the front passenger seat as you reverse…. It is an awesome feeling!

At home, while in parking – you cannot sit still. You go to the window to check it out every five minutes, like: Is it actually there or is this just a dream? Is THAT really my car?

It is there, and yes – that’s your car! It is an overwhelming feeling. Finally, you get the feeling of the gods having smiled upon you.

Biko Zulu writes:

It’s a big thing, your first car. My first car was a Toyota E100, 1300 CC, or something like that.
I was 27. It was a basic car with a basic shape designed by a Japanese fellow called Akihiko Saito with a Ph.D. in Engineering.

I thought I would never fall in love with another car again. It was white and faster than light. I don’t recall if the AC worked or not. I know the brakes did, and that’s all the expectation you had of your car; could you stop when you needed to stop? The back left door had a problem, couldn’t open from the outside.

I had to lean all the way, between the front seats, to open it. It felt grown up to do that. It felt grown up to do something I saw my dad do when I was a child; hold the passenger seat as I reversed looking back.

It was just me and my old Toyota E100 with about 200 million kilometers on it. But what a beauty that carried beauties. Man, the memories!

In nine out of ten times, it is an uphill task achieving that first milestone.

It often calls for months of saving, living hand-to-mouth to even get enough to lay down as the deposit – or to build enough credit score with the banks to qualify for car financing.

Luckily, Co-op Bank has risen to the occasion, making your car dream come true.

Co-op Bank is now offering financing on Pre-Owned Cars. You can now secure funding for up to 100% to buy a pre-owned motor vehicle of your choice.

You do not have to be a lifetime client of the bank – as anyone with an income can walk into a second-hand car dealership.

Select the vehicle that best suits them, and walk into a Co-op Bank branch to get the financing they need for the car.

It’s that simple.

Features of the Co-op Bank Pre-Owned Car Financing?

  • The loan will enable you to purchase a private vehicle that is pre-owned
  • The car has to be a maximum of 8 years old
  • Fees applicable include: Appraisal/Negotiation fees, Insurance fees, Motor Vehicle Valuation and Tracking fees
  • Repayment period of between 60 months to 96 months.The vehicle being purchased acts as the Security.

What are the requirements needed

  • Applicant’s ID and KRA PIN Certificate
    Latest 3 months’ certified Pay slips
  • Latest 6 months’ bank statements (if you’re not banking with us)
  • Copies of employment contract, or letter of appointment / Letter of Introduction from the employer
  • Motor Vehicle Sales Agreement/Proforma Invoice
  • Copy of Logbook/Import Documents/NTSA search records
  • Original valuation report from approved valuer in the Bank’s panel

It is about time you made it happen.

Apply now for Co-op Bank Pre-owned Car Financing. Just fill in this application form, attach the requirements and hit ‘Submit’.

Easier still, walk into your nearest Co-op Bank branch.

Call our contact center on 0703027000 or WhatsApp 0736690101 or email us at [email protected]

Co-op Bank leads the market with Ksh32.4 Billion Profit for Year 2023

Co-op Bank is pleased to report a Profit Before Tax of Kshs32.4B on for Full Year 2023, a commendable 10% growth compared to Kshs29.4B recorded in Full Year 2022.

This represents a Profit after Tax of Kshs23.2B compared to Kshs22.0B reported in 2022. The strong performance by is in line with the Group’s strategic focus on sustainable growth, resilience, and agility.

Dividends

The strong performance has led to a sustained increase in shareholder value as reflected in the competitive Return on Equity of 21.0%. The Board of Directors has recommended a dividend payment of Kshs8.8B, being a payout of Kshs1.50 per share, subject to approval by the regulators and shareholders.

The Annual General Meeting (virtual) will be held on Friday, 17th May 2024.

Key Performance highlights

Financial Position

The Group has registered strong growth as follows:

  • Total Assets grew to Kshs671.1 Billion, a 10.5% growth from Kshs607.2B in the same period last year.
  • Net loans and advances grew to Kshs374.2B ion, a 10.3% growth from Kshs.339.4 Bill ion in 2022.
  • Customer deposits grew to Kshs451.6 Billion, a 6.6% increase from Kshs423.8B.
  • External funds from development partners stands at Kshs67.3B from Kshs.48.1B in 2022.
  • Shareholders’ funds have grown to Kshs113.6B, a 5.5% increase from Kshs107.7 Billion in 2022.

Comprehensive Income

  • Total operating income grew by 0.6% from Kshs71.3B to Kshs71.7B.
  • Total non- interest income grew by 2.8% from Kshs25.7B to Kshs26.5B.
  • Net interest income remained stable to stand at Kshs45.2B compared to Kshs45.5B in 2022.
  • Total operating expenses decreased by 6.1% from Kshs42.2 Billion to Kshs39.7B, with a critical focus on Cost Management.

Cost Management

The Group reports excellent efficiency gains from the various initiatives to record a Cost-to-Income Ratio of 47. 0% in FY2023 from 59% in FY2014 when we began our Growth & Efficiency journey.

A Strong Digital Footprint

New Core Banking System goes Live

The Bank in June 2023 successfully upgraded the core banking system to the latest version of Finacle from Infosys, one of the best-rated platforms globally, marking a critical milestone in the bank’s digitization journey to enhance service excellence and provide the most innovative and advanced banking solutions.

In addition, the Co-operative Bank of South Sudan successfully went Live on the new Finacle system on 17th March 2024, concluding the full migration of the Group to the new system thereby enabling the Group’s digital synergy.

Through our digital channel strategy, the Bank has successfully moved over 91% of all customer transactions to alternative delivery channels, a 24-hour contact center, 599 ATMs & Cash Deposit Machines (CDMs), mobile & internet banking and over 17,000 network of Co-op kwa Jirani agents.

Our Omni-channel platform continues to offer users accessibility and enhanced experience.

The platform interfaces online banking through personal computers, mobile phones and USSD availing our services to all customers through their preferred channel yet retain the same experience from wherever they are.

Meo-op Cash Mobile wallet continues to drive substantial non-funded income streams with 5 Million customers registered and Kshs75.B in loans disbursed in 2023, averaging Kshs6.3B per month.

Over 208,000 customers have taken up the MSME packages we rolled out in 2018, and 58,850 have been trained on business management skills. In 2023, we disbursed Kshs18.6B to MSMEs through our Mobile E-Credit solution. MSMEs make up 15.8% of our total Loan Book.

Our unique model of retail banking services avails access to cash for FOSA operations, enabling 484 FOSA outlets to support over 15M Sacco members access banking services even in rural/ remote areas.

Wide and Expanding Branch Network

The Branch network has expanded to a total of 194 outlets (4 in South Sudan). We have planned 15 additional outlets this year, with 2 at lmaara Mall on Mombasa Road, Nairobi and Ugunja in Siaya already opened.

Eight new branches namely Nakuru Bahati Road, Kimana – Kajiado, Matuu, Thika Kwame Nkrumah, Greenwood Mall – Meru, Kenol – Makuyu, Hindi – Lamu and Bamburi – Mombasa were opened in 2023.

A Growing Team

The Bank continues to invest in a competitive team set to serve at existing functions at the same time tap new growth opportunities across all areas of the business.

Staff Numbers have grown from 4,864 as at the close of 2022 to 5,400 as at year 2023 close, creating job opportunities for over 530 young people.

Subsidiaries

Co-op Consultancy & Bancassurance Intermediary Ltd posted a Profit Before Tax of Kshs877.1 Million in FY2023, 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 Kshs291.3M in FY2023 compared to Kshs132.7M in 2022, a 119.5% growth

Co-op Trust Investment Services Ltd contributed Kshs226.0M Profit Before Tax in FY2023, an 8.6% growth. The Subsidiary has Funds Under Management of Kshs218.4B.

Kingdom Bank Limited (A niche MSME Bank) contributed a Profit Before Tax of Kshs1.08B in FY2023, a remarkable growth of 36.4% from Kshs792.6M reported in FY2022.

Commitment to Sustainability

In 2022, the Bank embarked on an enhanced Environmental, Social and Governance (ESG) roadmap to integrate ESG considerations into its operations with several key milestones achieved.

The Bank’s commitment to ESG excellence was celebrated at the 2023 Kenya Bankers’ Sustainable Finance Catalyst Awards, with the bank emerging as the Overall Award Winner.

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 the inception of the program.

Accolades

The Bank was named the Overall Winner of the just concluded Banking Industry Customer Satisfaction Survey conducted by the Kenya Bankers’ Association (KBA). Co-op Bank was also named the winner in the Tier One Bank Category.

This is the second consecutive win, having also won the overall title for year 2022. The survey was conducted by interviewing over 30,000 banking customers across the country.

Other key awards in year 2023;

At the CIO 100 Awards, the Bank’s Chief Information Officer Charles Washika was named the C/O of the Year in Africa, Banking Sector Award.

At the IFC Global SME Awards held in Mumbai India, the Bank won the SME Financier of The Year in Africa – Gold Award.

Conclusion

The Co-operative Bank Group continues to pursue strategic initiatives that focus on resilience and growth in the various economic sectors.

This is anchored on a successful universal banking model supported by an innovative digital presence, a wide physical footprint, and the unique synergies in the over 15-million-member co-operative movement that is the largest in Africa.

Co-op Bank’s Expansion Plan Targets 15 New Branches in 2024

Co-op Bank’s Director of Retail and Business Banking William Ndumia, has revealed the lender’s ambitious plans to open 15 new physical branches across the country.

Despite clients significantly making inroads with digital services, the bank is still devoted to bring services closer to the people.

“When we look at our mission and vision, we want to be dominant in this market and there are some areas where we have not gone into. There are even counties where we do not have a presence,” said Mr Ndumia.

“We want to seal that gap. Also, because of the infrastructure development that has happened across the country, there are some key towns that have come up and there is a lot of business and some of our customers are spreading out.”

Co-op Bank, which has an operation in South Sudan, has intensified its expansion locally where it sees untapped growth opportunities.

The new 15 branches seeka to add to the eight opened in 2023, and the five opened in 2022.

The latest industry survey by the Kenya Bankers Association (KBA) shows that 45.7% of customers have aligned to fully-automated or self-service platforms, in contrast to 16.5% that opts for human-assisted services. The former includes mobile, internet and chatbots.

Mr Ndumia, however, said the market continues to face the pressure of “we want something close” given the changing demographics in satellite towns or rural towns coming to life as devolution initiatives spur growth.

He noted that Co-op Bank has already opened one branch in Ugunja town in Siaya County and will this month be opening another one in Imaara Shopping Mall, the new retail complex on Mombasa road at the entrance to Nairobi’s Imara Daima estate.

Co-op Bank will then follow up with another branch in Luanda town in Vihiga County, bringing competition to the doorsteps of Equity and KCB.

Mr Ndumia was speaking after the signing of a new asset financing deal with motor vehicle dealer Isuzu East Africa through which Co-op will support schools and businesses in acquiring buses and commercial vehicles.

The asset finance scheme will see schools enjoy a 100 percent financing while businesses will access 95 percent financing from Co-op Bank.

Customers buying commercial vehicles will enjoy a 60-day grace period.

Schools will have a one-term moratorium when they purchase the buses with repayment extended to 72 months on a termly basis, which adds up to 18 terms at zero processing fee.

Isuzu East Africa and Co-op Bank Partner to Empower Schools and Businesses through Flexible Vehicle Financing

Isuzu East Africa and the Cooperative Bank have announced an Asset Finance Scheme designed for schools and businesses that desire easier financing terms to cope with the current operating environment.

A good number of educational institutions and business continue to record reduced cashflows, which therefore calls for easier financing terms.

At an event held at Isuzu East Africa, the motor vehicle assembler’s Managing Director, Rita Kavashe said that:

“Today, Isuzu East Africa, has partnered with the Cooperative Bank to provide solutions that will address the needs of our customers during these challenging economic times. We are thrilled to launch a Financing scheme that provides a ninety five percent Financing option for Isuzu N-series, Isuzu F-series and Isuzu Pickups TFS and TFR Series.”

During the signing of the partnership between Co-op Bank and Isuzu EA for school bus financing. (Image: Twitter).

The current operating environment has affected the ability of many schools and businesses to secure necessary cash deposits for asset purchases.

This financial constraint limits their ability to initiate or expand investments in critical assets.

The Isuzu/Cooperative Bank Asset Finance Scheme provides the financial boost to enable customers raise enough cash deposits for purchasing new vehicles.

“The partnership aims to make vehicle acquisition easier for Kenyan schools and businesses with 100% and 95% asset financing respectively. The financing options cover all Isuzu vehicle models,” Rita explained.

On his part, Cooperative Bank Managing Director and Group CEO Dr Gideon Muriuki, observed that the Bank partnership with Isuzu East Africa is designed to assist educational institutions and business acquire the critical assets they require within their current financing abilities.

“We have observed that a good number of our business customers are giving priority to financing their stocks and operations.

We have therefore made available an additional digital credit of upto Ksh.1 million for MSME customers and Ksh.2 million to schools over and above the 95% and 100% asset Financing.” said Dr. Muriuki.

In addition, Co-op Bank announced that customers will also enjoy an extended loan repayment period of upto 72 months.

Educational institutions will have a one-term moratorium when they purchase the buses, with Repayment extended to 72 months on termly basis, which adds up to 18 terms at 0% processing fee, in addition to a working capital loan of up to Ksh 2 million.

Co-op Bank reviews Daily Cash ATM Limit to Ksh60,000

Co-operative Bank of Kenya has raised its daily ATM [automated teller machine] withdrawal limit by 50 percent to Sh60,000, as banks start reviewing their daily transaction ceilings to reflect the reduced spending power among customers.

Co-op Bank has informed the customers of the review, the first in nearly a decade, that will enable those who need to withdraw amounts above Sh40,000 to use the over 600 ATMs across the country, instead of lining up at branches.

“Dear client, for your convenience, we have increased the total amount of money you can withdraw on our ATMs from Sh40,000 to Sh60,000 per day,” said the bank in a message to customers.

Co-op Bank in February 2015 doubled the limit to Sh40,000, citing the need to relieve pressure from branches.

The limit per transaction will, however, be at Sh40,000 as the ATM limit, meaning that a customer requiring Sh60,000 will have to carry out two transactions.

Co-op Bank’s limit per transaction on its digital platform, M-Co-op Cash, is at Sh70,000.

Related: https://www.ghafla.com/sponsored/co-op-bank-amongst-winners-of-lucrative-ksh100-billion-pension-contribution-fund/

The bank’s move mirrors that of Standard Chartered Bank Kenya which in February 2019 raised its daily ATM withdrawal limit from Sh40,000 to Sh60,000 with a maximum withdrawal per transaction set at Sh40,000.

KCB Bank Kenya and Equity Bank Kenya currently have a daily withdrawal limit of Sh50,000, with a Sh40,000 limit per maximum transaction.

Stanbic Bank Kenya’s daily limit is at Sh40,000, with the same figure being the maximum per transaction.

Smaller withdrawals mean the customers have to go to the ATMs more frequently, besides increasing the cash handling costs.

Customers withdrawing money via ATMs incur a cost of Sh36 per transaction, made up of banks’ commission and excise duty.

Many banks allow customers to withdraw at the ATM above the general cash value limits but this requires that they apply and get approval first.

Such arrangements are however still subject to the Sh40,000 limit per transaction, meaning that one will make multiple withdrawals to get their desired cash.

The ATM limit helps in the efficient operation of the machines so that they do not get emptied too quickly while the card limit is usually necessary to limit the damage on one’s account in case of fraud.

Higher daily limits at ATMs help banks to decongest branches, which many are increasingly using as advisory centres for small and large businesses, instead of for depositing and withdrawing money.

The raised limits also accommodate customers who may have reservations about transacting such sums of money from bank agents, especially those located in areas where security may be a challenge or agents running out of float.

This comes weeks after telcos were allowed by the Central Bank of Kenya to increase their limits as they sought to allow mobile banking customers more headroom to do more transactions.

This saw Safaricom triple the daily transaction limits on its mobile money platform to Sh500,000, strengthening its capacity to compete with commercial banks in the lucrative digital payments market.

The telco has also allowed individuals and businesses to hold Sh500,000 in their M-Pesa wallets as mobile money evolves from person-to-person payments to an e-commerce tool.

Source: BD

Co-op Bank amongst Winners of Lucrative Ksh100 Billion Pension Contribution Fund

NCBA, Co-operative Bank and Stanbic banks have won the lucrative deal to keep the more than Sh100 billion in pension contributions held by the Public Service Superannuation Scheme (PSSS).

The PSSS disclosed the three banks pipped eight other rival registered custodians of pension funds to the deal and will now handle billions collected from more than 350,000 civil servants.

This includes police officers and teachers who started contributing to their own pension savings scheme in 2021.

For now, we have a clear roadmap and have already done contracts with a fund manager, three custodians, and a fund administrator. This has been done through a competitive process with the contracts being awarded through the scheme trustees.

All we are doing on our part is to monitor that each party is playing its role,” said PSSS chief executive Jonah Aiyabei.

The three banks beat Bank of Africa, Equity, I&M, KCB, the National Bank of Kenya, Prime Bank, SBM, and Standard Chartered who are registered custodians of pension banks as of 2020.

All the 11 banks had been in a heated race for lucrative contracts to keep the contributions, which began in January 2021.

A work plan by the Treasury showed that the custodian banks will carry out the services for three years renewable on expiry by mutual agreement for a further period of three years depending on performance.

High School Chronicles: My First Nerve-wracking Public Speaking Experience

I was generally a shy kid. Unless I was around close friends and family, speaking was something I had to think about – never mind public speaking.

I dislike being in the spotlight, but I have met introverts who’ve managed to excel in related engagements – teaching, preaching and singing.

It happened during my first week in high school.

Now, oblivious to me – my admission had elicited a lot of interest. I was the poster boy for the classic ‘you-can-achieve-anything’ narrative.

I had attended a rural day-primary school, running a mile to and fro on a daily basis, and, yet – managed to secure entry marks to a prestigious national school.

My grades had also qualified me for a four-year scholarship, thanks to the Co-op Bank Foundation.

The school held an assembly once a week – on Fridays’.

First, I was shocked by the sheer number of students. Rows and rows of neatly starched collars, blue blazers and khaki trousers.

The captains stood in a separate line on the right-hand side, with their emblazoned notebooks. I felt as insignificant as a grain of sand on a long beach.

The principal’s main topic was, of course, us – the new students. I did not pay much attention to the speech. I was busy scanning the students, trying to see if there’s anyone familiar.

At some point, the boy next to me elbowed me in the ribs: “Hey, the principal is calling your name…” I was stunned.

I slowly made my way to the front. I could feel the inquisitive bore of a thousand eyes on the back of my neck. I approached the podium. It was all-glass, much like we had at our local Catholic church.

My exact thought at the moment was that everyone would see if I peed on myself!

The Principal hands over the (mic), and says: “Introduce yourself, master…”

I was lost. First, I didn’t have a clue on the line of conversation before I was summoned. What do I talk about? Will they not laugh at my village accent?

Ha, I remembered that am the Firstborn Son of Nkanata, and Great-great-great grandson of Field Marshal Mwariama – the famed Mau Mau fighter.

“My name is…… “

I couldn’t go on. I was visibly shaking, heart racing a thousand beats to a minute.

Suddenly, I was aware of the silence – pin drop silence. I wasn’t a famous guy in class or anything. In the two days we’d been there, I had hardly made any friends or spoken much to anyone. I had largely kept to myself.

“Just tell them where you come from, why you are here and what you want to be in future…” The Principal says.

I do not remember much, other than racing through the particulars of my locality, an aspiration to be a top performer in class and that other surreal dream to be a software engineer.

The former remained constant throughout my high school stint, but the latter would mutate several times. Goals and ambitions are pretty ambiguous for a teenager, I guess!

Three decades later, I’m escorting my firstborn daughter to school. She’s joining Secondary School. The motions at admission are pretty much the same, except for the financial bit that has turned cashless. No one is lining up at the bursar’s office!

All I have with me are receipts from a Co-op Kwa Jirani agent. I conveniently paid my daughter’s school fees at the local grocery shop!

After handing over the receipt to the school’s accountant, I was preparing to give my daughter some pocket money, a luxury I didn’t have.

Just as I was about to hand her the cash, the accountant said,” You know this generation doesn’t handle money like we used to,”

All parents in the room were confused wondering who he was talking to.”

“Our school uses Co-op prepaid cards. This is a Visa pre-paid card which you can load upfront and give your child to shop at the school canteen which has a machine for swiping.

“You can load the card from anywhere, anytime via Mpesa pay bill 400222 or the nearest Co-op Bank branch.

Students can also withdraw cash while going home, from our school Co-op Agent, “they make the use and tracking of pocket money much better and safer than physical cash.

Incase card is depleted you can to up your child’s pocket money from anywhere you are through the MCo-opcash app or deposit with you nearest Coop Kwa Jirani agent.”

On school closing days, school trips or on occasions that a student needs cash he or she can widthraw cash at any Co-op ATM’s across the republic.

It’s a real game changer. Oh, one does not need to be a Co-op Bank customer to get the card.

All the parents present, me included, were all sold on the idea almost immediately.

Co-op Bank emerges Winner at 2023 Top Sustainable Finance Awards with a Q3 Profit of Ksh24.7 Billion

Co-op Bank Group is pleased to report a Profit Before Tax of Kshs. 24.7 Billion for the third quarter of 2023, representing an 8.6% growth compared to Kshs. 22.7 Billion recorded in the third quarter of 2022.

This represents a Profit after Tax of Kshs. 18.4 Billion compared to Kshs. 17.1 Billion reported in 2022.

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

Sustainable Finance Award

Co-op Bank has been named Overall Winner at the Kenya Bankers Association (KBA) 2023 Sustainable Finance Catalyst Awards.

This is the fourth time in six years that Co-op Bank has been named overall winner, having also won the overall title in 2017, 2019 and last year 2022.

In addition to scooping the overall title, Co-op Bank also won in specific award categories that include being named as the Most Innovative Bank, Best in Financing Commercial Clients, Best in Promoting Gender Inclusivity, and the Best in Promoting Accessibility for People with Disabilities (PWD).

Key Q32023 Performance highlights:

Financial Position: The Group has registered sustained growth as follows;

Total Assets grew to Kshs. 661.3 Billion, a 6.3% growth from Kshs 622.1 Billion in the same period last year.

Net loans and advances grew to Kshs. 378.1 Billion, a 12.8% growth from Kshs.335.2 Billion in 2022.

Customer deposits grew to Kshs 432.8 Billion, a 0.2% increase from Kshs. 432.0 Billion. External funds from development partners have increased by 56.5% to Kshs.65.6 Billion from Kshs. 41.9 Billion in 2022.

Shareholders’ funds have grown to Kshs. 108.1 Billion, a 7.1% increase from Kshs. 100.9 Billion in 2022.

Comprehensive Income

Total operating income grew by 2.3% from Kshs. 52.2 Billion to Kshs. 53.4 Billion.

Net interest income grew by 2.5% from Kshs 32.0 Billion to Kshs 32.8 Billion.

Total non-interest income grew by 2.1% from Kshs. 20.2 Billion to Kshs. 20.6 Billion.

Total operating expenses decreased by 2.1% from Kshs. 29.6 Billion to Kshs. 29.0 Billion.

Cost Management

The Group reports excellent efficiency gains from the various initiatives to record a Cost-to-Income Ratio of 46.4% in Q32023 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. 4.2 Billion which has supported the Bank’s Loan Loss Reserve/Coverage level of 69.1%.

A Strong Digital Footprint

The Bank successfully upgraded the core banking system to the latest version of Finacle from Infosys, which was rated globally as the top core banking system in 2022 by Gartner.

Through our digital channel strategy, the Bank has successfully moved 91% of all customer transactions to alternative delivery channels, a 24-hour contact centre, 608 ATMs & Cash Deposit Machines (CDMs), mobile & internet banking and over 18,000 network of Co-op kwa Jirani agents.

We have successfully migrated our customers to the Omni-channel, integrating accessibility and user experience that interfaces online banking through personal computers, mobile phones and USSD.

MCo-op Cash Mobile wallet continues to drive substantial non-funded income streams with 5 Million customers registered and Kshs 59.4 Billion in loans disbursed year to date, averaging Kshs. 6.6 Billion per month.

Over 193,000 customers have taken up the MSME packages we rolled out in 2018, and 42,413 have been trained on business management skills.

Year to date, we have disbursed Kshs. 15.9 Billion to MSMEs through our Mobile E-Credit solution. MSMEs make up 15.5% of our total Loan Book.

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.

Expanding Branch Network

The Bank has grown the branch network to 193 (4 in South Sudan). Eight (8) new Branches (Nakuru Bahati Road, Kimana, Matuu, Thika Kwame Nkrumah, Greenwood Mall – Meru, Kenol Makuyu, Hindi – Lamu and Bamburi – Mombasa) opened in 2023, whereas 5 Branches (Kabarnet, Iten, Kasarani, Kamakis and Chwele) opened last year.

Subsidiaries

Co-op Consultancy & Bancassurance Intermediary Ltd posted a Profit Before Tax of Kshs 762.9 Million in Q32023, 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 Kshs 246.9 Million in Q32023.

Co-op Trust Investment Services Ltd contributed Kshs. 154.5 Million Profit Before Tax in Q32023, a 9.6% growth. The Subsidiary has Funds Under Management of Kshs. 196 Billion (Q32023).

Kingdom Bank Limited (A niche MSME Bank) has contributed a Profit before Tax of Kshs. 786.6 Million in Q32023, a remarkable growth of 24.8% from Kshs. 630.2 Million reported last year.

Environmental Social & Governance (ESG) Practice

The Bank continues to implement a best-in-class ESG policy framework supported by an ESG implementation roadmap, groupwide ESG champions and ESG Governance.

The Bank has invested in a unique forest rehabilitation project at “Solio Hill, Laikipia”; this is a partnership with the local community under the Community Forest Association and Kenya Forest Service (KFS) that has so far planted over 250,000 purely indigenous trees at the 600-acre government forest.

Co-op Bank Foundation, the Group’s social investment vehicle, continues to provide Scholarships to 10,264 gifted but needy students from all regions of Kenya.

Accolades

2023 Sustainable Finance Catalyst Award

Co-op Bank has emerged Overall Winner at this year’s Kenya Bankers Association (KBA) Sustainable Finance Catalyst Awards.

This is the fourth time in six years that Co-op Bank has been named overall winner, having also won the overall title in 2017, 2019 and last year 2022.

Commenting on the Award, the Group Managing Director & CEO, Dr. Gideon Muriuki said;

“Sustainability is fully integrated in our business model that stands on the three pillars of Economic Sustainability, Social Sustainability and Environmental Stewardship.”

“As a Bank that is predominantly-owned by the 15 million-member Co-operative Movement that is represented in all regions of the country, we are inclusive by design, which has enabled us to not only deliver shared prosperity today, but also helped us build an awareness and prudence to avoid participation in activities that risk putting future generations in jeopardy.”

2023 IFC Global SME Awards

Co-op Bank was awarded the SME Financier of the year in Africa – Gold Award at the Global SME Finance Awards 2023.

The Awards recognize financial institutions and fintech companies for their outstanding achievements in delivering exceptional products and services to their SME clients.

TAB Global – The Middle East and Africa Awards 2023

Co-op Bank and Intellect Global Consumer Banking were awarded Best Omnichannel Technology Implementation by TAB Global (The Middle East and Africa Awards 2023).

The Awards recognize leadership in retail financial services, technology, risk and transaction finance in the Middle East and Africa.

Conclusion

The Group continues to pursue strategic initiatives that focus on resilience and growth in the various economic sectors.

This is anchored on a successful universal banking model supported by an innovative digital presence, a wide physical footprint, and the unique synergies in the over 15-million-member co-operative movement that is the largest in Africa.

Character Development: Nanyuki Town Showed Me Manenoz!

It is my first time in Nanyuki town. The last two days si nimeona mambo? Suddenly, nimejua the meaning of the phrase ‘Wueh!

It’s a pleasant little town that welcomes you in a massive bear hug but still holds back. It reminds me of running home in the rain and banging on my grandmother’s kitchen door. I’m soaked to the skin, loved and welcome, but not so fast, Sonny! There’s no way she’ll let me in dripping wet and muddy.

Enjoy the heat and the tantalizing smell of food from the doorstep till I can get my ducks in a row. Now, that’s how Nanyuki feels to me.

As a personal rule when in a new town, I steer clear of hotels or places with a star rating. I’m always after its vibe, heart and soul. This spirit thrives in the dark, litter-strewn back alleys where locals and ordinary folks live.

Nanyuki has the best on both fronts. She has classy, five-star places that serve breakfast with little towels soaked in steaming water on balconies overlooking lawns and grazing horses. The stories here are too formal. I prefer the other side with politically incorrect stories.

Lakini, nimeskia sana story za Nanyuki. I should have been afraid. But, self-confidence ni nini? I thumped my chest up: Ah, si nimekuwa places bwana. I did just fine in hungrier cities.

Sunday afternoon, I left my BnB and wandered downtown. In this context, it means getting to the fifth or sixth streets that circle the CBD. Nanyuki and Mombasa are similar – they have two major avenues running across. I wander around till I stumble into a small alley that sounds like a concert is in play. Music from different places merges.

There’s a row of little joints with comely names above the doors: Kwa Nyambu, Kwa Monica and so on. Each doorway hangs those ingenious blinds made from colourful plastic bottle tops. Ah, nice. Hizi sasa ndo base zangu. I start with Kwa Monica, I like the name. I stride in like the main actor in a Mexican action movie.

It’s a little dark, my eyes need a minute. There are three long tables with branded plastic sheets, and plastic chairs stacked in two’s. There’s a gigantic TV in a cage above the counter that’s reinforced with iron bars. A past La Liga match is streaming. I see a ‘Free Wifi’ poster. Great. A few patrons silently watch me. A girl emerges from the counter.

As soon as the girl gets close, I ask loudly so that the patrons hear.

“Sasa Sister, kwani Nyambu alienda wapi?”

I take off my denim jacket and drape it over the next seat. I’m trying to relax like a sort of regular. Eight out of ten times – every other joint in Kenyan towns has had a girl named Nyambu running it. Check that out.

Someone on the other table beats her to the answer.

“Ah, Nyambu?! Unajua Nyambu? Alas, bro….huyo alienda Christmas hakurudi” A guy shouts, rises and grabs the next seat. It has my denim jacket draped on it.

“Mi naitwa Abdalla…” he says, extending a hand. I fist bump instead.

I ask for a soft drink and point to my now-friend Abdalla, who asks if he would like a drink. Of course, he would. In less time than you can say Timbuktu, Abdalla is reeling off the particulars of this town better than any guide you’ll meet in the 5-star places.

Immediately, two things are clear. One, I’ve hit the jackpot – Abdalla is a terrific storyteller. Two, I’d be staying longer in Nanyuki.

Abdalla tells me about himself. He’s a coastal native but he’s been around for give or take three decades. I doubt he’d remember his Msambweni village well. But, granted the man has lost little of his people’s famed storytelling skills. It gets better the merrier he gets. If he’d gone to college, he would have made a terrific radio morning show host. He invites his friends.

I’d ask Abdalla some random crazy stuff.

Like, in Msambweni, has he ever bumped into a night runner?

The story’s build-up would be as exciting as the story itself!

Abdalla would lean back like he had spent a lifetime studying a congregation of night runners. I was hooked. Sunday afternoon passed quickly. The joint started filling up towards evening. It started getting chilly, too. A lot of locals are rocking those checked Maasai Kikoi’s. Nanyuki is hot by day, and chilly by night.

I reach for my denim jacket. Wueh! No trace. It had disappeared. I cannot answer the how-when-and-with-who. Suddenly, I realised that I had not received a call that entire afternoon. My backup Kabambe phone was in the jacket, along with Ksh70 in coins. Luckily, my smartphone had run out of charge and left charging at my BnB.

Wueh! Wacha Abdalla aanze kuzusha. It was total mayhem.

Inwardly, I knew I’d never get my jacket, phone and money back no matter the ruckus that we raised here. He knew it too. I had no other money on me – and, I still had a bill to clear. We had a running total of Ksh1350.

I had my wallet in the back pocket with only my ID card. I never carry cash when travelling. It’s too risky. I used to carry my Co-op Bank Visa Card. Lately, the bank’s mobile banking app – Mco-opCash – has usurped all the need for cash or ATM, including withdrawals.

Abdalla walks me to a Safaricom agent shop four doors down from Mama Monica’s. I needed to replace my lost SIM card. I did not have any money in my MPesa account, but I knew I could still access my Coop Bank account via Mco-opCash.

I had the Mco-opCash app on my Android phone, but I had lost the sim card. Even if I replaced the SIM card, I’d still have to visit a Co-op Bank branch to activate and link it to the app. I had one option: To replace the SIM card and access Mco-opCash through the USSD code *667#.

Half an hour later, we returned to Mama Monica’s. I borrowed a handset from the waitress and inserted my replaced Safaricom sim card. I dialled *667# to access Mco-opCash account and made a transaction withdrawal to my MPesa account. That’s the beauty of Mco-opCash.

If your phone gets lost, you can replace the SIM card and access your account. I’ll find time to visit a Co-op Bank branch to reactivate my new sim card and link it to the Mco-opCash app.

Nanyuki imenionyesha maneno. But I live by the adage that everything is either a win or a lesson.

I’ll still stick around. I’m still very hooked on Abdalla’s stories.

Kingdom Bank Invests in Farmers and Stakeholders in Support of Sustainable Economic Growth

Agriculture is an important economic activity for Kenya contributing to approximately 33% of the country’s GDP and employing more than 40% of the total population.

Over the recent years, we have seen Government, the private sector and development agencies join hands in working towards the revolution of the sector to propel the country forward in terms of increasing food security and building resilience for communities and the country at large.

While great strides have been made, more can still be done to support the agriculture value chain players to enhance their production, improve their quality and above all add value to the agriculture products through processing.

The potential of the sector though huge, remains moderately untapped mostly due to a lack of sufficient financing, poor agricultural practices and a limited number of extension services to support farmers.

Kingdom Bank, a subsidiary of the Co-operative Bank of Kenya, has invested in supporting the sector through various strategies that have proven effective, inclusive and impactful not only on its customers but also on the sector at large.

Gertrude Mjomba and Simon Mwang’ombe from Dannde Oils exhibited their coconut-based products at the Kingdom Bank stand during the 2023 Agriculture Society of Kenya Nairobi International Trade Fair.

First, the Bank has a dedicated agribusiness unit that focuses on empowering farm input providers, farmers, food processors and distributors. The empowerment of these value chain players is in the form of financial support through the provision of savings, loans, investment, digital financial solutions and payment platforms that allow these players to scale their agribusiness ventures.

Although many other banks also extend agriculture financing, Kingdom Bank’s value proposition is hinged on personalized relationship management and superior client servicing. This means that each customer is mapped to a Relationship Manager who handles their day-to-day operations and also extends financial advisory services as a value add to customers.

In addition, the bank has signed extensive partnerships with other stakeholders in the industry including motor vehicle and equipment service providers, SME trainers and key government institutions to offer farmers within the bank network affordable solutions that can support them in mechanizing their operations, growing their output and enhance their efficiency when it comes to agriculture.

This concerted effort has seen the bank advance over Ksh 62 million to the agriculture sector from the year 2021 to date. This loan distribution forms a huge percentage of the bank’s active loan book showcasing a commitment to support farmers and the agriculture value chain.

In fact, the support to the sector has not gone unnoticed with the Agriculture Society of Kenya feting Kingdom Bank with several accolades in the 2023 circuit of the ASK shows and trade fairs for having the Best Bank Stand.

Kingdom Bank stand at the recently concluded 2023 Agriculture Society of Kenya Nairobi International Trade Fair at the Jamhuri Showground.

“This is the first year the bank has participated in the agriculture shows and we successfully exhibited our brand, our solutions and our promise to our customers across the country in Kisii, Kisumu, Nakuru, Mombasa, Nyeri and Nairobi allowing us to also engage with agriculture players and identifying other areas in which we can support them,” said Kevin Muendo the Head of Micro Credit and Agribusiness at Kingdom Bank.

He also added that the bank remained intentional about creating market linkages for its customers and that is why several were able to exhibit their solutions at the bank’s stands in the shows. This includes among others, Dannde Oils, an enterprise run by two ambitious youths who process coconut to produce oil, coconut sugar, coconut flour and other by-products including cookies and other snacks.

Knights Energy a customer of the bank that provides solar solutions for industrial, commercial and residential use was also present at the Nairobi International Trade Fair showcasing their solutions within the clean energy space at the bank’s stand. In fact, Knights Energy powered the Kingdom Bank stand using solar power showcasing a commitment to embrace clean energy.

So the next time you want agriculture financing, think Kingdom Bank.

Simply walk into any of their branches countrywide and engage them based on your needs. Alternatively, call them on 0709 881 300 for support.

Co-op Bank leads Bid to Stabilize Small Businesses against Loan Defaults

There is a timely effort by banks to cushion small businesses and stave off mass loan defaults. This comes after a three-pronged hit from the weakening shilling, dollar dearth and rising interest rates.

Convergence of these headwinds has ripped up the playbook of most lenders as they move to stave off a resurgence in non-performing loans in an economy where businesses and individuals have also been hit with new taxes.

Banks are fretting that the progress, which had been achieved in offering accommodation to business customers following the Covid-19 pandemic disruptions may go under the drain in the emergence of new and unforeseen challenges in the operating environment.

They are now reaching out to small and medium-sized enterprises (SMEs) with support packages including extending repayment periods and connecting some with affordable suppliers of imported goods.

Lenders say they are emboldened by the statistics that showed that of the 6,572 MSME loans valued at Sh122.5 billion that were restructured last year, over 90 per cent were being serviced.

“With elevated repayment in terms of ticket sizes of repayment, that is actually an extra burden on the customer. But with an elongated period in terms of loan tenors, that supports customers,” says the Kenya Bankers Association.

The consistent slump of the Kenya shilling against world majors, which has shed over 19 per cent of its value against the dollar since January, has for instance thrown into disarray many small businesses dependent on imports.

Electricity and fuel prices have also been rising, partly on the State’s stance to cut subsidies and increase taxes, catching many businesses on the wrong foot.

The weakening of the shilling and rising energy prices have coincided with a rise in the cost of credit, piling significant pressure on the margins and cash flows of small businesses.

The introduction of new taxes on both individuals and businesses has played a double-edged sword role, increasing operating costs while also weakening the purchasing power of consumers.

Bankers say these shocks have been especially damaging because they were mostly unexpected and have all converged at nearly the same time.

Lenders are worried that most borrowers if left on their own, will struggle and default in servicing their loans, heightening the spike in bad debts across the banking system.

Their interventions have come to the aid of many small businesses such as car dealers, clothing and footwear shops and manufacturers who source inputs abroad and have had to adjust their budgets upwards or cut the size of imports, even as access to dollars remains scarce.

“We are supporting MSMEs on cash flow-based restructures, by matching their loan repayments with their current business income, free of restructuring fees, on a case-by-case basis,” says Mr Gideon Muriuki, managing director at Co-operative Bank of Kenya.

Central Bank of Kenya (CBK) data already indicates a steady rise in loan defaults. Gross non-performing loans—the amount of loans on which interest and principal have not been paid for at least three months— hit Sh586.2 billion in July, a Sh10.1 billion jump from the previous month.

Lenders had endured a rise in defaults for five consecutive months to May when the figure peaked at Sh592.6 billion before cooling to Sh576.1 in June.

At Sh586.2 billion, borrowers defaulted on 14.7 per cent of the Sh3.975 trillion that banks had issued as loans by the end of July. Lenders have reacted by increasing the provisioning for loan defaults.

The Head of Legal Services at Kenya Mortgage Refinance Company Elisha Nyikuli, the Director, Corporate & Institutional Banking at Co-op Bank Jackie Waithaka & the CEO National Co-operative Housing Union Mary Mathenge at a recent stakeholder’s meeting.

 

Banks’ weighted average interest rates have been rising over time to hit 13.5 per cent in July— the highest since March 2018 when the figure was at 13.49 per cent. This has been in line with the rising Central Bank rate.

Lenders, armed with the lessons learnt from managing COVID-19 shocks, reckon that working with customers early enough is likely to forestall a deterioration in the business performance of small firms.

Co-op Bank has been facilitating face-to-face meetings between Kenyan businesses and their sourcing suppliers abroad, for more structured negotiations.

Such engagements in countries such as Malaysia and Vietnam have helped SMEs improve the way they handle the sourcing of imports.

The tours, complemented with free expert financial literacy and coaching webinars have helped address issues such as cash flow and financial management, tax and online marketing.

“We regard today’s SMEs as the multinational corporations of tomorrow, and, therefore, commit significant resources and in addition partner with institutions that have domain expertise in enterprise development such as International Finance Corporation to support their growth,” says Mr Muriuki.

Lenders have also ramped up non-financial services activities that largely entail the hosting of customer engagement forums where expert-guided discussions are held to prepare SMEs for coping with emerging needs.

I&M Bank says it has enhanced support to small businesses in the form of unsecured business loans, local purchase order financing, invoice discounting and stock financing while also standing ready for restructures for firms that run into servicing problems.

“We now proactively engage one-on-one with such customers who are facing challenges to ensure they are running a sustainable business,” says Shameer Patel, head of retail banking at the I&M.

Banks are also increasing their focus on State-backed credit guarantee schemes to offer working capital loans at concessional rates.

KCB Bank Kenya and the Swedish International Development Cooperation Agency in August rolled out a Sh1 billion guarantee scheme for de-risking SMEs in their efforts to access credit

“The seven-year guarantee facility will enable the bank to strengthen its commitment to financing SMEs which continue to experience challenges, especially with access to affordable credit,” said KCB.

Source: Business Daily

Co-op Bank now Second Most Valuable Bank at Nairobi Stock Exchange

Co-operative Bank of Kenya has overtaken KCB Group to become the second most valuable lender on the Nairobi Securities Exchange as the latter’s share price continued to fall.

Co-op Bank’s stock was unchanged yesterday at Sh11.85, giving it a market capitalisation of Sh69.5 billion.

This has seen the lender overtake KCB for the first time, opening a gap of Sh2.3 billion.

KCB’s share price fell 4.78 per cent on Thursday to close at a new 52-week low of Sh20.9, assigning it a market value of Sh67.1 billion.

The bank’s share price fall gained pace in recent weeks after it reported lower earnings and a surge in provisions for loan defaults in the half year ended June.

At the start of the year, KCB’s market value was ahead of Co-op Bank by Sh52.2 billion. KCB’s relegation to third place came after it shed Sh56 billion in paper wealth since the first trade of the year.

Over the same period, Co-op Bank has lost only Sh1.4 billion. The bank has one of the lowest share price volatility among the country’s publicly-traded lenders.

Equity Group remains the most valuable bank at Sh135.6 billion despite losing Sh34.3 billion over the review period.

At current levels, Equity is valued at almost KCB and Co-op Bank combined.

A file image from the Nairobi Stock Exchange (NSE)

The second-place rank is likely to remain in contention as observers watch the evolution of the performance of the two lenders in the next few quarters. Their rivalry is among the upheavals in the league table of Kenya’s listed banks.

Standard Chartered Bank Kenya has also closed in on NCBA Group with their market capitalisation standing at Sh61.8 billion and Sh62.1 billion respectively as of Thursday.

StanChart has grown its market value by Sh7 billion since the start of the year while NCBA has lost Sh2 billion over the same period, leading to the convergence.

The top five lenders are Equity Bank – 136bn, Co-op Bank – 70bn, KCB – 67bn, NCBA – 62bn and Stanbic – 45bn.

The most significant change in shareholder paper wealth was seen at KCB whose chief executive Paul Russo, now in his second year at the helm, is taking measures to address the legacy bad debt at the lender.

KCB reported a 20 per cent net profit drop from six months to June, nearly tripling its provisioning for loan defaults. Its net profit fell to Sh15.5 billion from Sh19.5 billion posted in the preceding similar period.

KCB’s operating expenses increased by 60 per cent to Sh50.61 billion while provisions for non-performing loans jumped 2.4 times to Sh10.2 billion from Sh4.32 billion.

Analysts say investors have overreacted to the bank’s spike in provisions, placing a buy recommendation on the stock.

All the listed banks remain undervalued by historical standards, with the lenders having previously traded at multiples of their net assets before the onset of the bear run.

Co-op Bank maintains market lead with Ksh16.4 Billion Profit in First Half of 2023

Co-op Bank Group is pleased to report a Profit Before Tax of Kshs. 16.4 Billion for the first half of 2023, representing a 7.4% growth compared to Kshs. 15.3 Billion recorded in the first half of 2022. This points to a Profit after Tax of Kshs. 12.1 Billion compared to Kshs. 11.5 Billion reported in 2022.

Key Performance highlights:

Financial Position

The Group has registered sustained growth as follows;

  • Total Assets grew to Kshs. 664.9 Billion, a 10.1% growth from Kshs 603.9 Billion in the same period last year.
  • Net loans and advances grew to Kshs. 365.4 Billion, a 10.7% growth from Kshs.330.1 Billion in 2022.
  • Customer deposits grew to Kshs 463.9 Billion, a 9.7% increase from Kshs.423.0 Billion.
  • External funds from development partners have increased by 43.6% to Kshs.59.4 Billion from Kshs. 41.4 Billion in 2022.
  • Shareholders’ funds have grown to Kshs. 108.3 Billion, an 11.9% increase from Kshs. 96.7 Billion in 2022.

Comprehensive Income

  • Total operating income grew by 3.0% from Kshs. 34.4 Billion to Kshs. 35.4 Billion.
  • Net interest income grew by 2.3% from Kshs 21.1 Billion to Kshs 21.5 Billion.
  • Total non-interest income grew by 4.0% from Kshs. 13.3 Billion to Kshs. 13.8 Billion.
  • Total operating expenses decreased by 0.1% from Kshs. 19.2 Billion to Kshs. 19.1 Billion.

Cost Management

The Group reports excellent efficiency gains from the various initiatives to record a Cost-to-Income Ratio of 46.0% in H12023 from 59% in FY2014 when we began our Growth & Efficiency journey.

Credit Management

The Group prudentially made provisions of Kshs. 2.9 Billion which has enhanced the Bank’s Loan Loss Reserve/ Coverage levels to 71.1%.

Strong Digital Footprint

A new Core Banking System goes Live as the Bank successfully upgraded the core banking system to the latest version of Finacle from Infosys, which was rated globally as the top core banking system in 2022 by Gartner.

The new banking system delivers enormous benefits which include;

  • Enhanced Security: The new system features advanced security measures to protect customer data and assets more effectively.
  • Improved Performance: The new system is more efficient, processing transactions and requests faster.
  • Increased Flexibility and agility: The new system is designed to be more flexible, allowing us to respond to changing customer needs more effectively.
  • Better User Experience: The new system features a more intuitive and user-friendly interface, making it easier for customers to access and manage their accounts.
  • Through our digital channel strategy, the Bank has successfully moved 91% of all customer transactions to alternative delivery channels, a 24-hour contact centre, 546 ATMS, mobile & internet banking and over 17,000 networks of Co-op kwa Jirani agents.
  • 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 availing our services to all customers through their preferred channel yet retaining the same experience from wherever they are.
  • MCo-op Cash Mobile wallet continues to drive substantial non-funded income streams with 5 Million customers registered and Kshs 41.3 Billion in loans disbursed in the first half of 2023, averaging Kshs. 6.9 Billion per month.

Wide Branch Network

The Bank has grown the branch network to 191 (4 in South Sudan). New seven (7) Branches (Kimana, Matuu, Thika Kwame Nkrumah, Greenwood Mall – Meru, Kenol Makuyu, Hindi – Lamu and Bamburi – Mombasa) opened in 2023, whereas five Branches (Kabarnet, Iten, Kasarani, Kamakis and Chwele) opened last year.

Subsidiaries

Co-op Consultancy & Bancassurance Intermediary Ltd posted a Profit Before Tax of Kshs 591.3 Million in   Q22023, riding on strong penetration of the Bancassurance business.

  • Co-operative Bank of South Sudan which is a unique joint venture (JV) partnership with the Government of South Sudan (Co-op Bank 51% and GOSS 49%) made a Profit before tax of Kshs 205.1 Million in Q22023. This performance, however, translated to a monetary loss of Kshs 36.5 Million attributable to hyper-inflation accounting occasioned by currency devaluation of the South Sudanese pound.
  • Co-op Trust Investment Services Ltd contributed Kshs. 106.8 Million in Profit Before Tax in Q22023, an impressive 25% growth. The Subsidiary has Funds Under Management of Kshs. 197.3 Billion.
  • Kingdom Bank Limited (A niche MSME Bank) has contributed a Profit before Tax of Kshs. 521.9 Million in Q22023, a remarkable growth of 29% from Kshs. 405.9 million reported last year.

External funds from Development Partners

The Bank signed a KShs. 12.6 Billion long-term credit agreements 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 appropriate lending to MSMEs for future growth.

Environmental Social and Governance (ESG)

The Bank continues to implement a best-in-class ESG policy framework supported by an ESG implementation roadmap, group-wide ESG champions and ESG Governance.

Our portfolio of loans above USD 1 Million comprises Kshs. 37.4 Billion which is Green (33.2%) and Social (66.8%) affirming our commitment to sustainable banking.

Additionally, the Bank has published its first TCFD (Task Force on Climate-related Financial Disclosures) report with the Central Bank of Kenya and is getting ready to report as per ISSB (International Sustainability Standards Board) inaugural sustainability standards-IFRS S1 and IFRS S2 effective 01 January 2024.

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 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 supported 10,264 students since the inception of the program.

Co-op Bank Capacity-building & Technical Assistance Fund

The Bank established a Kshs. 100 Million Fund to support agricultural co-operatives with capacity-building and digitization. The Bank has carried out capacity-building at 30 Co-operatives in the coffee, dairy, potatoes, poultry, cotton, and cereals subsectors, expected to impact over 50,000.00 individual farmers.

Direct Settlement System (Coffee Exchange)

Following a competitive selection process, the Bank has been appointed to provide the clearing and settlement platform for coffee trade by the Nairobi Coffee Exchange (NCE).

The Direct Settlement System (DSS), developed internally by the bank’s ICT and Innovations team, is a mission-critical infrastructure for the delivering of the much-desired transparency in the trading and settlement of trades at NCE for the benefit of all players in the coffee value chain notably farmers.

Accolades

The Bank’s Director of Finance and Strategy Caroline Karimi was recognized at the Angaza Awards 2023 for her role in steering and shaping the financial services sector through her leadership. Angaza Awards were established in 2020 to recognize Africa’s Leading Women in Banking and Finance.

The Bank’s Head of Agriculture Co-operatives Business Esther Kariuki was named the African Banker of the Year 2023 for driving innovative agricultural lending models and practices that not only made small-holder farmers bankable but also made them attain competitive credit records superior to comparable borrowers in other sectors.

 

Co-op Bank receives US$100 Million Facility from DEG-Led Consortium

The Co-operative Bank of Kenya has received a long-term 7-year funding facility amounting to USD 100 million (Kshs 13.8 Billion) from a consortium of financial institutions led by DEG for on-lending mainly to Micro, Small and Medium-sized Enterprises (MSMEs) in Kenya.

The loan is a Tier II Facility that has already been fully disbursed, where DEG acted as Lender, Mandated Lead Arranger and Facility Agent while the Consortium included The Africa Agriculture & Trade Investment Fund (AATIF), Micro Small Medium Enterprises Bonds (MSMEB) and European Development Finance Institutions namely Finnfund, Norfund and the co-financing facility European Financing Partners (EFP).

DONE DEAL: The DEG-led Consortium and Co-op Bank teams after sign-off of the $100 Million financing agreement. (L-R) Wilfred Apunda – Senior Investment Manager DEG, Michael Fischer – Director Financial Institutions Africa at DEG, Caroline Karimi – Director Finance & Strategy Co-op Bank, Monika Beck – Member of DEG’s Management Board, Dr Gideon Muriuki – Group Managing Director & CEO Co-op Bank, Judy Kinyanjui – Investment Director Norfund and Antje Steiner – Regional Director East Africa at KfW DEG. Partly hidden at the back are William Nyaoke – Regional Director East Africa, Norfund and Sam Kibugi – Company Secretary Co-op Bank.

Commenting upon the disbursement of the facility, Co-operative Bank Group Managing Director & CEO Dr. Gideon Muriuki said:

“The funding by DEG and the Consortium is most timely in view of the great need to better support our business customers. In addition, the long-term tenure of the facility has significantly boosted the bank’s ability to offer solutions that are better structured to fulfil the long-term financing needs of MSMEs.”

Monika Beck, Member of DEG’s Management Board said:

“By acting as lead arranger and providing the subordinated loan to Co-op Bank, DEG contributes to the further development of Kenya’s financial sector and the wider economy through the creation of jobs and local income, all geared towards the attainment of Sustainability Development Goals.”

Co-op Bank continues to leverage its strong balance sheet to access funding and allied partnerships with global development partners to enhance the bank’s opportunities for growth and overall performance as here under;

  • Enhance the bank’s assets and liability match where long-term loans can be financed using the long-term debt.
  • Diversify the bank’s asset and funding portfolio.
  • Expand the bank’s client base especially among MSMEs.
  • Boost the bank’s competitive position on account of affordable lending.

The DEG-led facility is a significant support to the bank especially at this point in time when the bank’s digitization journey is moving full steam ahead with the recent transition to a new, robust core banking system.

Co-op Bank’s Initiative spurs Local Potato Farmers to attain Global Quality Standards

Potato farmers hit a key milestone on 30th June for potato farmers in Kenya as key players in the potato value chain “The Potato Consortium” concluded a major step towards realizing ‘farm-to-plate’ value chain model.

The consortium led by Co-operative Bank in collaboration with the County Government of Nyeri and other consortium partners Yara E.A, Bayer E.A and Agrico PSA witnessed the harvesting of the potatoes in the first Demonstration Farm in Kieni Sub-county in Nyeri, whereby project assumptions, projections on yield per unit area as per the prescribed nutrition, crop protection and crop husbandry were put to test.

Agro Potato Services Africa’s Conen Henreyer, the President of Simplifine Steve Carlyon, Nyandarua Governor Kiarie Badilisha and Head of Agri Co-operatives at Co-op Bank Esther Kariuki during the Potato Consortium launch in Ol Kalou, Nyandarua.

The Demo fully succeeded in achieving desired standards. The approved buyer of the produce Simplifine Limited (a food processor contracted by KFC to provide processed potatoes) also attended the demonstration and committed to buying directly from the farmers without going through any middlemen.

Co-op Bank entered into a consortium with other key players in the agricultural value chain to launch The Potato Consortium where every partner brings in board their domain expertise to support farmers venture into profitable and sustainable potato farming.

The Consortium has put together this package;

  1. High-yielding potato varieties that are in demand by key food processors and retailers including KFC
  2. Quality inputs availed at the right time and affordable prices
  3. Agronomic support through extension services embedded within the County Government set-up i.e. use of Ward Agricultural Officers and Co-operative officers
  4. Market-driven production, where farmers plant potato varieties that processors require, thereby undertaking contract farming with predictable off-take prices
  5. Predictable yields based on prescribed package of crop nutrition and crop protection regime, supported by established demonstration farms managed by the consortium partners serving as centers of excellence.
  6. Capacity-building for farmer’s co-operatives by Co-op Bank through Co-op Consultancy Services, to enable co-operatives become vibrant, well governed, efficient and profitable for better returns to the farmers.
  7. Affordable financing from Co-op Bank which is aligned to the potato crop cycle and structured to fund the needs of farmers throughout the production, harvest and post-harvest management.
  8. Digitization of the farming, production and marketing processes to offer reliable traceability to the consumer and enable all players plan ahead.

With the Nyeri demo having proven viability of concept, the consortium will now proceed to rollout by way of recruiting farmers for full scale production. Similar demo farms are underway in other counties identified for initial pilot namely Nyandarua, Elgeyo Marakwet and Nakuru.

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 1st quarter of 2023. That represents a 4.67% growth compared to Kshs.7.78 Billion recorded in the 1st 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.

Also Read: https://www.ghafla.com/sponsored/pate-island-in-lamu-proof-that-lobster-soup-is-a-vitality-booster/

Co-op Bank marks Easter by Slashing Interest Rates on Personal and Asset Loans

Co-op Bank has made a significant move to reduce the interest rates charged on Personal Loans and Asset Finance to selected key borrowers from 14% per annum to 13% p.a. with effect from April 1 this year.

This rather ‘contrarian approach’ bucks the industry trend where majority of the lenders are revising lending rates significantly upwards, especially in light of the recent upward adjustment of CBR by a huge 75 basis points to 9.5%.

Co-op Bank’s reduction of the lending rate is the bank’s response to the good loan repayment record and reduced default risk that the target check-off scheme loans have recorded over time. It is a deserved reward for customers who have maintained a consistently good credit record.

Among the main beneficiaries of the new lower rates include key corporate and institutional employers including the Kenya Defense Forces (KDF) and other armed services, the Kenya Police Service, the Teachers Service Commission (TSC), Government Ministries, the National Assembly, key state corporations such as Kenya Revenue Authority (KRA), KenGen among others.

Customers have been informed directly by way of a text message:

“Dear Customer, You can now top-up your existing personal loan at a rate of 13% per annum instead of 14%. Please apply at any Co-op Bank Branch.”

The new offer has elicited palpable excitement as it offers a huge relief especially at this season when many Kenyans are grappling with a cash crunch, when ‘every shilling counts’.

Co-op Bank retains a credit pricing model that is dynamic and attuned to respond effectively to credit performance. In this regard, the bank is working to extend this benefit beyond the current target customer segments namely Personal Loans and Asset Finance, to include all borrowers with good credit history.

Also Read: https://www.ghafla.com/sponsored/co-op-bank-rolls-out-affordable-housing-loans-for-aspiring-home-owners/