Kenya’s Co-operative Bank posted KSh 7.2 Billion Net Earnings in the six months period that ended on 30th June 2020. This is compared to KSh 7.5 Billion over a similar period last year.
The decline in earnings can be attributed to high non-performing loans arising from the adverse effects of coronavirus.
Financially distressed households, individuals, and firms have had to negotiate with banks to restructure their loan facilities, denying lenders interest income.
Unaudited financial results for Co-operative Bank Group shows that Gross non-performing loans and advances to customers increased substantially from KSh 30.6 Billion in H1, 2019 to KSh 34.7 Billion, a rise of KSh 3.7 Billion.
Net loan provision, which is the Total Non-Performing Loans less provisions increased from KSh 14.9 Billion to KSh 15.6 Billion during the period under consideration.
Net NPL exposure for the lender worsened considerably from KSh 154 Million to KSh 3.8 Billion.
The Co-operative Bank’s loan loss provisions increased to KSh 13.1 Billion from KSh 10.9 Billion in 2019.
Interest income, which is derived from the Group’s earnings from loans and advances to customers, sale of government paper as well as earnings from deposits held for other banking institutions, grew marginally from KSh 20.4 Billion to KSh 21.8 Billion.
With coronavirus adversely affecting businesses and household incomes, earnings on loans by banks have been hit severely.
The Co-operative Bank Group’s Fees and Commissions on loans to customers fell from KSh 1.1 Billion in H1, 2019 to KSh 614.2 Million at the end of the first six months of this year.
The bank’s balance sheet increased from KSh 429.6 Billion in H1, 2019 to KSh 513.9 Billion in H1, 2020, while customer deposits increased from KSh 323. 6 Billion to KSh 384.6 Billion.
Total Shareholders funds, which represents the net worth of the lender, rose from KSh 71 Billion in H1, 2019 to KSh 80.1 Billion at the end of the first six months of this year.
The lender’s net loans and advances to customers rose from KSh 257.6 Billion to KSh 272.2 Billion as the lender rode on its vast balance sheet to lend out to corporate and retail borrowers.
The Co-operative Bank Group’s gross profit declined to KSh 9.7 Billion from KSh 10.4 Billion, with total comprehensive income also falling to KSh 7.7 Billion from KSh 7.8 Billion in the previous period.
Earnings per share of the lender declined from KSh 1.27 to KSh 1.23 during the period under review, indicating a deterioration of the lender’s profitability.
ALSO READ:Co-operative Bank Full Year Earnings Up 12.5% to KSh 14.3 billion
