Co-op Bank of Kenya has shown an improvement in financial performance, increasing shareholder value, with a Return on Equity of 21%. The Board recommended a dividend payout amounting to KSh 8.8 billion, at a rate of KSh 1.50 per share. The largest beneficiary will be Co-op Holdings Co-operative Society Limited, the top shareholder of the lender, who will receive KSh 5.68 billion on its 64.56 percent stake. These dividend payments will be approved at the lender’s upcoming virtual Annual General Meeting to be held on May 17th, 2024.
The bank also recorded a 5.2 percent growth in net earnings, amounting to KSh 23.2 billion in the financial year that ended in December 2023, compared to KSh 22 billion at the end of 2022. Additionally, Co-op Bank’s pre-tax profit grew 10% to KSh 32.4 billion in 2023 compared to KSh 29.4 billion in 2022.
Its balance sheet grew by 10.5% from KSh 607.2 billion in 2022 to KSh 671.1 billion in 2023. Net loans and advances to customers also increased by 10.3% from KSh 339.4 billion in 2022 to KSh 374.2 billion in 2023. Customer deposits grew to KSh 451.6 billion in 2023 from KSh 423.8 billion in 2022, an increase of 6.6%. Furthermore, external funds from development partners stood at KSh 67.3 billion in 2023 from KSh 48.1 billion in 2022.
In the review period, Co-op Bank’s net interest income was flat at KSh 45.23 billion compared to KSh 45.52 billion posted in the preceding similar period. However, non-interest income grew three percent to KSh 26.46 billion, taking the operating income to KSh 71.69 billion from KSh 71.25 billion.
Co-op Bank’s operating expenses decreased by six percent to KSh 39.67 billion from KSh 42.24 billion, thanks to reduced provisioning for loan losses and a drop in other operating expenses. The provision for loan defaults fell 30.8 percent to KSh 6 billion, while other operating expenses were reduced by 16 percent to KSh 12.2 billion, more than absorbing the rise in staff costs.
Co-op’s staff costs increased to KSh 16.69 billion from KSh 14.78 billion, due to salary increases and the hiring of 536 new employees. The expanded workforce came in the period Co-op increased its branch network by eight to hit 194, and the lender is planning to close in 2024 with an additional 15 branches.
“The bank continues to invest in a competitive team set to serve at existing functions and at the same time tap new growth opportunities across all areas of the business,” said Mr Gideon Muriuki, Managing Director and CEO of the Group, during an investor briefing.
Kingdom Bank, which is 90 percent owned by Co-op Bank, saw its net profit retreat to KSh 655 million from KSh 930 million due to a higher tax liability. Pre-tax earnings had grown 32 percent to KSh 1.1 billion.
Co-op Consultancy & Bancassurance Intermediary Limited posted a pre-tax profit of KSh 877.1 million, while Co-operative Bank of South Sudan returned a pre-tax profit of KSh 291.3 million. Co-op Trust Investment Services Limited also contributed KSh 226 million in pre-tax profit, as the subsidiary’s funds under management closed the period at KSh 218.4 billion.
