KENYA – Cooperative Bank Group has posted a 12.6 per cent growth to KSh14.3 billion (US$136.2m) in net profit for the year ended December 31 lifted by strong growth in non-interest income.

Total non-interest income, mainly from fees and commissions on loans and advances, increased by 33 percent from KSh12.8 billion (US$121.9m) to KSh17.3 billion (US$164.8m).

Co-op CEO Gideon Muriuki said its mobile wallet dubbed M-Co-op cash was pivotal in the growth of non-funded income as registered customers hit 4.8 million, helping it disburse loans valued at over KSh43.1 billion (US$411m) as at end of December 2019.

“The group has continued with a strategy for continued deepening and dominance in our domain market segment leveraging on our successful penetration of the micro, medium and small enterprises (MSMEs) and the Saccos, while reviewing opportunities to grow alternative income streams,” said Mr Muriuki.

The growth in its bottom-line was further supported by 1.4 percent growth in total interest income to KSh43.64 billion (US$415.7m) even as loan book expanded by 8.7 percent to KSh266.71 billion (US$2.54bn).

Interest income from government securities was up 16 percent to KSh11.35 billion (US$108.1m) as investment in government paper grew by 46.8 percent to KSh117.8 billion (US$1.12bn).

Interest expense rose marginally by KSh96 million (US$0.91m) to KSh12.34 billion (US$117.6m). This was despite an 8.6 percent growth in deposits to KSh332.82 billion (US$3.17bn) indicating higher demand deposits.

Co-op’s South Sudan joint venture in which it owns 51 percent stake made a before-tax profit of KSh240.6 million (US$2.29m).

This performance, however, translated to a monetary loss of KSh344.7 million (US$3.28m) attributable to hyperinflation accounting occasioned by currency devaluation of the South Sudanese pound.

Mr Muriuki expects the acquisition of Jamii Bora Bank, which has over 350,000 customers in 17 branches and asset base of KSh12.5 billion (US$119.8 million), to support future growth.

“The acquisition offers Co-op Bank the opportunity to cross-sell and deepen product offering to the enhanced customer base, and create a niche bank to offer specialised credit offerings that include MSME banking, microfinance, youth and women banking, asset finance and leasing,” said Mr Muriuki.

Co-op Bank’s board of directors on March 11 approved talks to acquire 100 percent stake in the lower tier lender.

In the year under review, operating expenses grew eight percent to KSh27.8 billion (US$264.8m) on account higher provisioning for non-performing loans (NPLs).

The provisions jumped 38 percent to KSh2.5 billion (US$24m) even as gross NPLs rose 7.3 percent to KSh31.6 billion (US$301m).

Co-op said over 70,000 customers have taken up its MSMEs loan packages launched in 2018 and has so far disbursed over half-KSh8.05 billion (US$76.7m)-of KSh15.2 billion (US$144.8m) earmarked for the program.

The board has recommended dividends of KSh1 per share, amounting to KSh5.86 billion (US$55.8m). The payout will be the same as that of 2018.