Co-operative Bank of Kenya’s (Co-op Bank) net profit grew 7 per cent to Ksh12.99 billion for the half-year ending June 2024, driven by higher interest and non-interest income.
The lender’s net earnings increased from Ksh12.14 billion reported during the same period last year. This growth was driven by a 10.7 per cent rise in net interest income to Ksh23.9 billion and an 11.2 percent increase in non-interest income, reaching Ksh15.4 billion.
“The strong performance by the bank is in line with the group’s strategic focus on sustainable growth, resilience and agility delivering a return on equity of 22.1 per cent,” Co-op Banking Managing Director Gideon Muriuki said.
Co-op Bank’s operating expenses for the first half of the year increased by 11 per cent, reaching Ksh21.3 billion, up from Ksh19 billion, due to higher provisions for loan losses and increased spending on employee compensation.
Provisions for loan defaults increased by 4.9 per cent to Ksh3 billion, while staff costs climbed by 14.8% to Ksh9.1 billion. The rise in staff expenses was attributed to salary increases and the recruitment of additional employees to support the lender’s expanding branch network.
“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,” Mr. Muriuki said.
During the review period, Co-op’s staff increased by 317 employees, bringing the total to 5,426 by the end of June. Meanwhile, the number of physical branches grew by eight, reaching a total of 199.
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They include branches at Imaara Mall in Nairobi, Ugunja in Siaya, and Luanda in Vihiga. Additionally, the bank has launched a new branch in Meru through its subsidiary, Kingdom Bank, and its South Sudan subsidiary has also opened another branch. Co-op Bank aims to end 2024 with a total of 15 new branches.
Kingdom Bank, 90 per cent owned by Co-op Bank, experienced a decline in net profit to Ksh444.9 million from Ksh522 million, largely due to increased tax obligations. However, its pre-tax earnings increased by 21.8 per cent, reaching Ksh635.5 million.
Co-op Consultancy & Bancassurance Intermediary Limited reported a pre-tax profit of Ksh682.7 million, whereas Co-operative Bank of South Sudan achieved a pre-tax profit of Ksh264.3 million.
Co-op Trust Investment Services Limited reported a pre-tax profit of Ksh142.7 million, with its funds under management increasing by 17 percent to reach Ksh231.3 billion by the end of the period.
Co-op Bank’s asset base expanded by 7.8 per cent to reach Ksh716.9 billion over six months, while customer deposits rose by 9.4 percent to Ksh507.4 billion, marking the first time deposits have surpassed the Ksh500 billion threshold.
By Frank Mugwe
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