Co-op to invest in KMRC as half year profit hits Ksh7.1bn
The Co-operative Bank of Kenya has become the first financial institution to declare its interest in injecting capital in the government’s planned mortgage company.
Co-op on Thursday said it would inject Ksh200 million into the Kenya Mortgage Refinance Company (KMRC) to support government plans to avail credit for the housing sector.
Co-op Bank group chief executive officer Gideon Muriuki said the bank would leverage its position with the co-operative movement to support the state backed mortgage plan.
“The board of directors of the Co-operative Bank has approved a key Ksh200 million capital injection in the share capital of the Kenya Mortgage Refinance Company support this most worthy objective become a reality,” Mr Muriuki said.
The government says creation of the agency will enable banks and saccos to issue 50,000 additional mortgages in five years.
The announcement came as the bank released its half year results, as it posted a 7.6 percent rise in net profit for the first six months of the year, as it increased its investment in government securities.
During the first half period ended June, the Co-op posted a net profit of Ksh7.14 billion up from Ksh6.63 billion a year earlier.
Cooperative Bank’s interest income due to lending to the government grew by 17.45 percent to Ksh4.54 billion as its investment in government securities rose to Ksh80.2 billion.
This offset flat growth of Co-op’s loan book which dropped to Ksh251 billion from Ksh252.6 billion recorded during a similar period in 2017.
Mr Muriuki said the bank was benefiting from gradual recovery of the economy even as it projects a stable second half of the year.
“This is a commendable performance in an operating environment that is gradually recovering from the significant headwinds that business had to contend with in the aftermath of the 2017 elections,” he said.
Total interest income rose 7.9 percent from Ksh19.25 billion to Kshs20.8 while interest income from loans and advances increasing by 5.7 percent to Kshs16.13 billion.
Co-op Bank’s loan loss provisions rose to Sh1.5 billion amid a 130.84 percent surge in gross defaults to Ksh28.2 billion.
The bank’s subsidiary in South Sudan posted a pretax profit of Kshs114.6 million compared to loss of Kshs60,000 in the first half of 2017.
For Citizen TV updates
Join @citizentvke Telegram channel
Video Of The Day: Nic Hailey: UK doing a lot to support Kenyan troops\' stay in Somalia