43pc jump for Co-op HY results

August 3, 2011
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, NAIROBI, Kenya, Aug 3 -The Co-operative Bank of Kenya’s pretax profit has risen 43 percent to Sh4.1 billion for the six months ended June 2011 on the back of increased lending to its customers.

During the period under review, net interest income rose by 46 percent to Sh5.9 billion as the bank’s loan book grew by 36 percent to Sh70 billion.

Briefing investors on Wednesday, Co-operative Bank Managing Director Gideon Muriuki said the customer base grew by 57 percent to 2.2 million accounts which had a direct impact on deposits which rose 19 percent to Sh130.7 billion.

“Our growth was mainly underpinned by the growth in our balance sheet notably; our loan book which grew by Sh25.1 billion (36 percent), deposits which grew by Sh21 billion and despite light liquidity we maintained a liquidity ratio of 38 percent,” he said.

Mr Muriuki disclosed that the bank does not intend to have a Rights Issue asserting that their capital base of Sh20 billion would be key in spurring further growth of the deposit base to Sh250 billion.

“Our current capital base of Sh20 billion can leverage a deposit base of over Sh250 billion. We will sustain a proactive capital retention strategy,” he said.

Mr Muriuki further exuded confidence that the bank will double its profit before tax next year given the business momentum generated by the growth in the first half year.

“The second half year will be squeezed in terms of interest margins but we have grown our loan book and we expect to double the Sh4.1 billion posted even with a bit of pressure on the cost of funds in the second half year,” he said.

Non-funded income increased by Sh2.94 billion and constituted 36 percent of the bank’s total revenue, mainly from fees and commissions notably from the ATM personal and business commissions, M-banking commissions, forex income and letters of credit.

The Co-operative bank increased its branch network by 36 locations between 2009 to-date, to reach 89 branches, a 68 percent growth.

According to the Managing Director, more branches will be opened in tandem with the structure of the expected devolution process.

“More branches will be opened in target strategic locations based on their profiles and business potential as well as aligned to the county structure,” he said.

The bank has also invested in over 35 auto banking Center’s with deposit taking capabilities that are providing customers a 24 hour banking service.

The coop bank will also venture into South Sudan to establish the Co-operative Bank of Southern Sudan with 70 percent ownership by Co-operative Bank of Kenya and 30 percent by Government of South Sudan, on behalf of South Sudan’s Co-operative movement.

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