NAIROBI, Kenya, May 27 – Cooperative Bank has disclosed that it will enter into a strategic joint venture with the cooperative movement in Southern Sudan as part of its foray into that country.
Coop Bank Managing Director Gideon Muriuki said on Wednesday that they were negotiating with the authorities in that country to have a partnership where they’ll have the majority shares, and the rest to be held by the Southern Sudanese authorities.
“We want to have a Southern Sudan identity when we get there so hopefully, we will have Cooperative Bank of Southern Sudan that will be 70 percent owned by the Cooperative Bank of Kenya and 30 percent owned by the Government of Southern Sudan (GoSS) holding in trust for the cooperative movement in that country,” he explained.
The bank is now shopping for premises which would house the four branches and expressed confidence that they would start operations before the end of this year.
Cooperative movement is still a new concept in Southern Sudan and it is being set up with the help of the Kenyan government which recently signed a Memorandum of Understanding with the GoSS which will among other things see the Cooperative ministry officials assist in the formation of Savings and Credit Co-operatives (Saccos) in Sudan.
Mr Muriuki added that this was the model the bank would adopt in its entry into Uganda which is their next target market.
“We will have a local identity. We will not be a Kenyan bank in Southern Sudan or Uganda but a Southern Sudan or Ugandan bank with a Kenyan connection. This, we believe is a winning strategy for us to substantially grow our business in those markets,” he emphasised.
Speaking during an investor briefing, Mr Muriuki said they were planning to widen the branchless banking concept through the opening of Point-of-Sales in various locations at an anticipated cost of over Sh200 million.
Through this investment, he added, they would not need to put up buildings or lease outlets, which is an expensive venture but they would be able to effectively serve their customers wherever they are.
However, plans to expand their branch network through leasing are still on going. The bank has so far opened seven outlets since January and 20 more are being refurbished in readiness for the opening before the end of the year. This will bring the total branch network to over 85.
The CEO underscored the importance of their ICT switch which has enabled Sacco members to access cash at their Automated Teller Machines through their debit cards, adding that already it had attracted 120,000 users.
This service is expected to attract over 300,000 users by the end of this year.
At the same time, Mr Muriuki said they were awaiting their shareholders’ approval at their Annual General Meeting on Friday before the newly renamed Kingdom Securities operations can begin.
Kingdom Securities came into being after Coop bank acquired a controlling stake in the troubled Bob Mathews Stockbrokers.
“This acquisition is Coop bank’s contribution towards strengthening and building confidence in our capital markets. The strategic investor Coop Holdings has since approved the transaction,” he added.
During the briefing, the bank announced a 29 percent increase in its profit before tax for the first quarter of the year to Sh1.04 billion from Sh805 million recorded in the corresponding period last year.
Total deposits increased to Sh71.9 billion compared to Sh54 billion while the loan book rose from Sh38.7 billion to Sh55.5 billion during the same period. Interest income rose by 24 percent to Sh1.56 billion and so did the operating expenses which went up by 18 percent to Sh1.2 billion.
“This growth is a reflection that the bank has successfully sustained its aggressive growth strategies despite the challenging economic circumstances,” Mr Muriuki enthused.