Gideon Muriuki, the Managing Director at Co-operative Bank of Kenya
Co-operative Bank of Kenya has posted a 5.2% growth in net profit to Shs23.2 billion in the financial year ended December 2023 on increased income and reduced operating costs.
The net profit grew from Shs22 billion posted in a similar period last year. The board has, on the back of the increased profit, recommended a dividend of Sh1.5 per share, amounting to Sh8.8billion, matching that of the previous year.
The dividend will be paid after the approval of shareholders in the virtual annual meeting slated for May 17, 2024. The top shareholder, Co-op Holdings Co-operative Society Limited, will receive Sh5.68 billion on its 64.56% stake.
“The strong performance has led to a sustained increase in shareholder value as reflected in the competitive return on equity of 21%,” said Gideon Muriuki, the Managing Director at Co-op Bank.
“The Co-operative Bank continues to pursue strategic initiatives that focus on resilience and growth in the various economic sectors.”
Net interest income in the review period was flat at Sh45.23 billion compared with Sh45.52 billion posted in the preceding similar year. However, non interest income grew 3% to Sh26.46 billion taking operating income to Sh71.69 billion from Sh71.25 billion.
Co-op Bank cut its operating expenses by 6% to Sh39.67 billion from Sh42.24 billion on reduced provisioning for loan losses and a drop in other operating expenses.
The provision for loan defaults fell 30.8% to Sh6 billion, while other operating expenses reduced by 16% to Sh12.2 billion, more than absorbing the rise in staff costs.
The staff costs increased to Sh16.69 billion from Sh14.78 billion on salary increase as well as the hiring of 536 new employees. The expanded workforce came in the period Co-op increased in its branch network by eight to hit 94. The lender is planning to close 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. Muriuki.
Kingdom Bank, which is 90% owned by Co-op Bank, saw its net profit retreat to Sh655 million from Sh930 million due to a higher tax liability. Pre-tax earnings had grown 32% to Sh1.1 billion.
Co op Consultancy & Bancassurance Intermediary Limited posted a pre tax profit of Sh877.1 million while Co-operative Bank of South Sudan returned a pre tax of Sh291.3 million.
Co-op Trust Investment Limited contributed Sh226 million in pre tax profit as the subsidiary’s funds under management closed the period at Sh218.4 billion.
The review period saw Co-op’s asset base grow 10.5% to Sh671 billion while customer deposits grew by 6.6% to Sh451.6 billion.
The external funds from development partners increased by 40% to Sh67.3 billion from Sh41.9 billion.