Co-operative Bank Group net profit for the first nine months of the year has dropped by 10 per cent to Sh9.77 billion, weighed down by near-doubling of Covid-19-related loan loss provisioning.
The decline in net earnings is from the preceding similar period’s Sh10.88 billion and came on the back of rising loan loss provisioning by 89.4 per cent to Sh4.02 billion.
Co-op Bank Managing Director Gideon Muriuki said the rise in provisions was in appreciation of the challenges that businesses and households are grappling with because of the coronavirus.
Other tier I lenders have also seen drops in net profits with that of Absa Kenya falling by 65.4 per cent as that of Equity Bank and KCB Group reduced by 43.1 per cent and 14.5 per cent, respectively, largely on higher provision for defaults.
Co-op Bank net interest income, however, rose by 11.8 per cent to Sh23.64 billion during the period as the bank expanded lending by six per cent to Sh284.23 billion.
Co-op Bank has so far restructured loans valued at Sh46 billion or 16.2 per cent of the loan book to accommodate customers seeking flexible options.
"We continue to actively engage our customers to support them through this period, by realigning the servicing of facilities, funding and transactional needs as the situation unfolds," said Mr Muriuki.
"The group continues to implement proactive enterprise risk management initiatives to ensure uninterrupted business operations."
Non-interest income, made up mainly of fees and commissions on transactions, dropped by 3.5 per cent to Sh213.6 billion following inter-bank transfer charge waivers, and wallets such as M-Pesa.
The period saw Co-op Consultancy & Insurance Agency post a pre-tax profit of Sh625 million, a growth from Sh511.1 million it earned in a similar period last year.
Co-operative Bank of South Sudan, where the group owns 51 per cent stake booked a pretax profit of Sh217.8 million, up from Sh174.7 million.Co-op Trust Investment Services posted Sh68.7 million pre-tax profit as funds under management grew by nearly a third to Sh123.7 billion.palushula@ke.nationmedia.com
