The Co-operative Bank of Kenya has become the sixth lender to issue a profit warning on expected 2020 earnings.
In a notice to shareholders on Friday, the bank attributed the expected collapse in earnings to economic disruptions arising from the COVID-19 pandemic.
The volatile operating environment has seen the lender raise its loan-loss coverage in the past twelve months shrinking its bottom-line in the process.
“As expected, loan loss provisions have been much higher than in the previous year in appreciation of the challenges that businesses and households continue to grapple with in meeting their obligations to the bank,” the lender said.
“In addition, Co-op Bank has absorbed currency translation losses in our South Sudan operation due to the hyper-inflation that continues to ravage the country.”
Co-op’s earnings through the first nine months of 2020 slumped by 11.1 per cent to Ksh.9.8 billion as the banks loan-loss provisioning costs nearly doubled to Ksh.4 billion from Ksh.2.1 billion in 2019.
At the same time, the lender’s stock of gross non-performing loans (NPLs) hit Ksh.40.2 billion in the period from Ksh.30.1 billion.
Other banks to issue profit warnings on expected 2020 earnings include Absa, Diamond Trust bank (DTB), Standard Chartered, I&M and NCBA.
Despite a variation in their respective performances, all six banks to issue profit warnings have been forced to make near similar loan-loss provisions are customers’ abilities to clear outstanding loans are shrouded in doubt.
Other lenders including KCB are expected to issue similar cautionary statements ahead of the full year financial disclosures from March this year.
On overall, the number of companies to have issued profit earnings on expected 2020 earnings stands at 16 as more economic sectors suffers the wrath of the pandemic.The list of firms to issue the earnings caution include Britam Holdings, East African Breweries Limited (EABL), Nation Media Group and Longhorn Publishers.Others are Kenya Power, Unga Group, East African Cables, Kenya Orchards, TPS East African (Serena Hotels) and Nairobi Business Ventures (NBV).Video Of The Day: | EVENTS 2020 | Raila Odinga’s reflections on 2020 and expectations for 2021 228 views