NAIROBI, March 25, 2024 – The Co-operative Bank of Kenya has maintained a dividend of Ksh 1.5 per share for the year ended December 31, 2023 after it recorded a 5.2 percent net profit growth to Ksh 23.1 billion.
The bank’s financial statements show that the lender’s profit in the previous year stood at Ksh 22bln.
The dividend amounting to Ksh8.8 billion will be paid on June 10 to shareholders on record as of April 28.
The growth of the bank’s earnings was driven by a lower cost base and a slight jump in non-interest income.
“The strong performance has led to a sustained increase in shareholder value as reflected in the competitive return on equity of 21 percent,” said Gideon Muriuki, the Managing Director, adding that the Co-operative Bank Group continues to pursue strategic initiatives that focus on resilience and growth in the various economic sectors.
Net interest income declined to Ksh 45.23bln as the bank incurred higher interest expenses to grow customer deposits in a rising interest rate environment.
Total interest expenses rose by 46.9 percent to Ksh 23.8bln as customer deposits expanded by Ksh 27.8bln to Ksh 451.6bln.
The cost of keeping interest-bearing deposits rose by a larger margin compared with total interest income which, grew by Ksh 7.3bln to Ksh 69bln.
Income from lending to customers increased to Ksh 44.8bln from Ksh 40.4bln while earnings from government securities rose to Ksh23.1bln from Ksh 20.8bln.
The loan book expanded by Ksh 34.8bln to Ksh 374.2bln, helping to grow interest income in an environment where banks also benefitted from upward revision of interest rates in line with the Central Bank of Kenya’s tightening of monetary policy.
The Co-operative Bank also purchased more government securities, boosting its portfolio of fixed income assets by Ksh 15.7bln to Ksh 189bln.
The CBK’s auction of new T-bills and bonds over recent months has seen a steady jump in the interest rates of the securities, raising the income of banks and other investors.
The bank reduced its operating expenses by six percent to Ksh 39.67bln on reduced provisioning for loan losses and a drop in other operating expenses.
The provision for loan defaults fell 30.8 percent to Ksh 6bln despite gross non-performing loans increasing to Ksh 66.9bln from Ksh 52.3bln.
Other operating expenses reduced by 16 percent to Ksh 12.2bln and helped to absorb the rise in staff costs.
The bank’s staff costs increased to Ksh 16.69bln from Ksh 14.78bln on salary increase as well as the hiring of 536 new employees.
The expanded workforce came in the period when the bank increased its branch network in Kenya by eight, raising its total outlets to 194. The bank also runs a banking subsidiary in South Sudan.
The bank is planning to open an additional 15 branches in Kenya this year, which is spelled in its expansion strategy.
“The bank continues to invest in a competitive team set to serve at existing functions and at the same time tap new growth opportunities across all areas of the business,” Muriuki said.
Kingdom Bank, in which Co-operative Bank owns a 90 percent stake, saw its net profit retreat to Ksh 655mln from Ksh 930mln due to a higher tax liability. Its pre-tax earnings had grown 32 percent to Ksh1.1bln.
Co-op Consultancy & Bancassurance Intermediary Limited posted a pre-tax profit of Ksh 877.1 million while Co-operative Bank of South Sudan returned a pre-tax profit of Ksh 291.3mln.
Co-op Trust Investment Services Limited contributed Ksh 226mln in pre-tax profit as the subsidiary’s funds under management closed the period at Ksh 218.4bln.
During the period under review, the bank’s asset base grew by 10.5 percent to Ksh 671bln while customer deposits grew 6.6 percent to Ksh 451.6bln.
External funds from development partners increased by 40 percent to Ksh 67.3bln from Ksh 41.9bln.
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