Co-operative Bank 2020 profit falls by 25 per cent to Ksh.10.8 billion

The Co-operative Bank of Kenya has announced a 24.5 per cent dip in full-year earnings to December 2020 with earnings plunging to Ksh.10.8 billion from Ksh.14.3 billion.

The dip in profit is largely attributable to a higher cover for expected loan defaults with provision expenses more than tripling to Ksh.8.1 billion from Ksh.2.5 billion in 2019.

The higher defaults cover is on the back of a steep rise in the lender’s non-performing loans (NPLs) which hit Ksh.59.1 billion at the end of the year from a lower Ksh.31.6 billion.

Nevertheless, Co-op managed to grow its core revenue streams with net interest income rising to Ksh.36.3 billion from Ksh.31.3 billion while non-interest funded income (NFI) grew by a marginal 1.7 per cent to Ksh.17.5 billion.

Total operating income in the year meanwhile stood at Ksh.53.8 billion from Ksh.48.5 billion.

In spite of issuing a profit-warning on the expected results, the bank has held off concerns on profitability to declare a final Ksh.1 dividend, the same as in 2019.

Co-op’s earnings per share declined in the period to Ksh.1.98 from Ksh.2.48 on the back of the profitability slack.

The lender says it has restructured Ksh.49 billion in customer loans over the past 12 months as part of its support to borrowers impacted by the COVID-19 pandemic.

Co-op’s latest acquisition, Kingdom Bank Limited, returned a loss of Ksh.76.3 million but is expected to mark a turnaround in 2021.

Co-operative Bank Group Managing Director Gideon Muriuki says the bank will continue to deploy mitigation strategies including digitization in managing the current macro-economic environment.

“The Co-operative Bank Group has put in place a proactive mitigation strategy anchored on a strong enterprise risk management framework, to enable uninterrupted access to banking services,” he said.

“We shall, riding on the unique synergies in over 15 million-member cooperative movement, continue to pursue strategic initiatives that focus on resilience and growth in the new normal as the nation focuses on COVID-19 containment programs and as vibrancy returns to the economy,” he said.