Co-operative Bank’s after-tax profit soars to hit Sh10.5 billion

Co-operative Bank has registered a 22 per cent jump in net earnings in the third quarter of its current financial year. The bank posted a Sh10.5 billion after-tax profit, up from Sh8.6 billion in a similar period last year.

On Tuesday, the bank’s shares edged up 0.4 per cent to trade at Sh13.40, with notable foreign investor demand (60.2 per cent of buys) ahead of the release of the financial results yesterday.

The bank, which has been on a two-year strategic transformation, said it hit high margins by focusing on improvement in operating efficiencies, sales force effectiveness and innovative customer delivery platforms.

The listed lender said it is moving 80 per cent of its transaction volumes on digital platforms and 50 per cent of their total value.

The bank also reduced its workforce from 4,000 in 2014 to the current 3,600 through retrenchment and natural attrition.

Chief Executive Gideon Muriuki (pictured) said the transformation project will allow them to sail through the interest rate-capping regime without having to lay off staff like rival lenders.

“We are not closing any branches or laying off staff. In fact, we are planning on making additional mall branches,” said Mr Muriuki during the release of the financial results in Nairobi.

He said the bank still needs physical branches because its 6.1 million customers insist that they are the first point of call and that it would be difficult to go into the counties without a physical presence.

Mr Muriuki said the bank’s balance sheet had grown substantially on the back of donor-funded financing, which meant that capital raising is not on the cards at the moment.

Co-op Bank’s total assets grew by Sh21.2 billion to Sh354 billion compared with Sh332.9 billion in the same period last year.

Shareholders’ funds grew from Sh49.5 billion to Sh59.2 billion, supported by a steady retention of earnings and improved earning over the years.

The lender’s loan book grew by 6.9 per cent to Sh227.1 billion while deposits jumped from Sh257.5 billion in September last year to Sh260.6 billion.

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