NAIROBI, Kenya, Mar 5- Competition in the banking sector has now been taken to the regional level after the Co-operative Bank announced plans to set up operations in Southern Sudan and Uganda.
Co-op Bank Managing Director Gideon Muriuki disclosed to reporters on Thursday that they were looking into the modalities of launching their services in Southern Sudan and was optimistic that they would be in the market by mid this year.
“Our Director of Cooperatives was there (Southern Sudan) last week to assess the situation. On our part we hosted their Cooperative Minister late last year as we want to get into a joint venture with the cooperative movement in their country,” he offered.
Their entry into Uganda, he added, would also be through a joint partnership and he was hopeful that the two subsidiaries would be up and running in a few months.
Equity Bank and the Kenya Commercial Bank Group are some of the local institutions that already have their presence in the two markets.
Mr Muriuki said although they had not worked out how much the bank would invest in the two projects; the funding would come from the Sh5.4 billion raised in their Initial Public Offering last year.
“We are not at the stage where it’s possible to determine how much it will cost us to go there but we have the money and will therefore do what needs to be done to make sure that the bank has a presence there,” he maintained.
While releasing the financial results for the year ended December 31 2008, the MD announced that they bank would soon expand into other financial services in a bid to diversify their revenue streams and cushion their overall bottom-line from any shocks.
In this regard, he revealed that they would venture into mortgage financing that would enable them to capitalise on the demand for property finance in the middle to upper market segments which is still very high.
“We now have a department (that is) doing mortgage finance; we will structure the product and hopefully launch it in the next week,” he said but refused to divulge further details such as its pricing structure.
During the function, the bank said it had realised a 53 percent rise in profit after tax from Sh1.55 billion recorded in 2007 to Sh2.37 billion since listing on the Nairobi Stock Exchange in December 2008.
Mr Muriuki credited the increase to the growth in interest income as well as the impressive performance in their treasury operations.
The profit outlook for 2009, he said, was positive and expressed confidence that their profitability would grow by 50 percent.
This would mainly be driven by their branch and ATM expansion which they hope to increase by opening 34 more branches and 70 ATMs in the course of the year.
“The group is already benefiting from the increased number of service points following the opening of more branches and the customer deposits which has grown by Sh11billion to Sh65.8 billion last year,” boasted the MD.
The board has recommended a dividend payout of Sh0.10 per share. The payout is subject to approval by shareholders at their Annual General Meeting scheduled for May 29 this year.