NAIROBI, Kenya, Aug 18 -Co-operative Bank of Kenya has announced its first half of the year results, registering a 1.8 percent year on year rise in its Earnings Per Share to Sh1.25.
The earnings include numbers from its newest subsidiary, Kingdom Bank (formerly Jamii Bora Bank) which it acquired in 3Q20.
During the period, Kingdom Bank posted Profit After Tax of Sh275 million, mostly attributable to other income.
Co-operative bank’s Loan loss provisions climbed 123 percent to Sh4.2 billion with Profit Betore tax coming in 8 percent year on year higher to Sh10.4 billion.
Profit After Tax was up 1.8 percent due to the lower effective tax, as lower tax rates were applicable in the prior period as part of the government COVID-19 pandemic related tax reliefs.
Profit before impairment came in 26.6 percent year on year, higher to Sh14.6 billion, a robust performance for the period.
The underlying performance was boosted by Total Operating Income: as such, Net Interest Income grew and Non-Interest Revenue, both registered impressive performance.
Fees and commission income along with other income showed a particularly robust performance after lapping a particularly weak 2Q20.
Overall, Non-funded to Total Income notched slightly higher to 35.4 percent compared to 34.3 percent in the previous period.
Standard Investment Bank (SIB) research department however notes that the bank’s nonperforming loans as a percentage of gross loans improved from about 20 percent to 15.6 percent.
“The continued level of provisioning worries us as to how much further we have to go on the loan book,” they said.
SIB had previously highlighted that the bank was slow in recognising the heightened credit risk environment brought about by the pandemic and it appears to have caught up with them.
“We thus expect the benefits of lower impairments being witnessed in some of the other banks to only come through later for Co-op Bank.”
