Co-op Bank Q1 profit dips 6pc to Sh3.2bn
The Cooperative Bank of Kenya is off to a slow start in 2017, posting a six percent drop in profitability in the three months to March.
During the first quarter, Co-op Bank’s net profit stood at Sh3.2 billion, a Sh200 million drop from the previous year.
The result was driven by a drop in net interest income despite having issued out more loans during the period.
Co-op Bank financials show that the bank’s loan book grew by 15 percent to Sh245.7 billion.
However the introduction of an interest cap law ate into the bank’s interest income, which stood at Sh7.7 billion.
Even investment in government securities did not fare well for the bank with earnings declining by 17.8 percent to Sh1.76 billion.
Total interest income dropped by 11 percent to Sh.5 billion.
Hyper inflation in South Sudan also affected the bank’s performance.
During the period, the South Sudan unit made a loss of Sh34.7 million largely on the devaluation of the currency.
Co-op Bank group chief executive officer Gideon Muriuki said going forward the bank will continue focusing on non bank channels to deliver services.
Already 88 percent of the bank’s total services are offered on mobile and agency banking channels.
Following the implementation of its restructuring plan, Co-op Bank was able to lower its interest expenses to just Sh2.8 billion.
The banking industry has been re-adjusting to a new interest cap regime with most turning to innovation to cut expenses.
KCB and NIC Bank have both recorded stagnant or a dip in profitability in the first quarter.
KCB has announced plans to close its operations in South Sudan after its Q1 profit dropped marginally to Sh4.54 billion.
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