The bank’s account holders grew by 44 percent to 2.3 million with the total deposits increasing from Sh123.9 billion over the corresponding period in 2010 to Sh142.6 billion.
“Interest income out of the increased loan book (Sh109.4 billion) grew by 38.6 percent from Sh11.83 billion to Sh16. 39 billion. Interest expenses however grew by a higher percentage (from Sh2.6 billion to Sh4.5 billion) to reflect the increased cost of funds in the second half of the year,” Managing Director Gideon Muriuki explained.
The board of directors has declared a dividend payout of 40 cents per share similar to what was paid out in 2010. A bonus issue of one share for every five ordinary shares held has also been recommended, subjected to necessary regulatory and shareholder approvals.
Its performance was also driven by the seven additional outlets that were opened during the year. An extra eight branches have been opened in 2012 while another 27 are at different stages of construction with the commencement of their operations slated for this year.
“We did a strategic overview on county structure under the new Constitution and we took a strategic position on major towns that we felt we need to have a presence,” the MD emphasised while observing that although it is a capital intensive exercise, it is a cost that will only be incurred once and portends great potential in growing the bank’s deposit base and transaction income.
To complement this ‘brick and mortar’ strategy, the bank embarked on its agency banking model which has since picked up, enabling it to bring services closer to the people.
Currently, of the 2, 400 ‘Co-op Kwa Jirani’ agents that have been approved by the Central Bank of Kenya 1,800 are operational, performing an average of 60,000 transactions per day. They are eyeing 4,000 by the end of 2012, as they seek to enhance their service delivery.
The bank is also leveraging on the strategic partnership it has with Co-operative Insurance Company (CIC) where it holds a 27 percent stake as it seeks to diversify its revenue streams, boost its competitiveness and maximise return to their shareholders.
As it also gears towards deepening the financial market, the bank is looking to roll out
bancassurance services that will see it sell insurance products in all its outlets which are expected to total 120 branches by year end.
“If the 2.3 million customers of Co-op Bank also buy insurance from CIC, imagine the impact it will have on them (CIC). We have piloted this in Nairobi and are creating desks in our entire branch network to support Co-operative Insurance Company,” Muriuki said of their mutually beneficial partnership.
The bank has already started recouping its investment in the insurance company with its Sh900 million capital injection contributing roughly Sh150 million to Co-op’s bottom line.
Further, they have been upgrading their core banking system which should go live in the third quarter of the year and contribute to positioning the bank for future growth.
All these initiatives are geared towards enabling the institution to capture more market share in the highly competitive banking industry.
Being an election year and seeing as the macro-economic environment has not really stabilised, the bank however continues to be cautiously optimistic.
Nonetheless, this has not dampened its expansion plans with the MD disclosing that they have received the final nod to venture into South Sudan where they are planning a strategic joint venture with the cooperative movement in the country.
“We are fine tuning the issues of percentage of shareholding and we believe that in the coming weeks or months, this should be rolled out fast,” Muriuki disclosed.
In the initial plan, Co-op Bank was scheduled to own 70 percent in the Co-operative Bank of Southern Sudan while the remaining 30 percent was going to be held by the Government of Southern Sudan in trust for the cooperative movement in that country.