Kenya’s Co-operative Bank Group has posted a net profit of KSh 14.3 billion at the close of the financial year ended 31st December, 2019. This is compared to KSh 12.7 billion recorded in 2018.
Considered one of the biggest lenders, Co-op bank Group’s fees and commissions on loans to its vast customer base rose from KSh 575.9 million to KSh 3.2 billion. The net interest income increased to KSh 31.3 billion from KSh 30.8 billion an indicator of the constrained credit environment following the presence of the rate cap law which has since been repealed.
The Group’s balance sheet size grew to KSh 457 billion from KSh 413.4 billion while loans to its customers increased to KSh 322.8 billion from KSh 306.1 billion in 2018. Interest on loans and advances declined to KSh 31.8 billion from KSh 32.9 billion the previous year.
Investment in the lucrative Government paper saw the bank’s earnings grow to KSh 11.4 billion from the previous KSh 9.8 billion.
Customer deposits increased from KSh 306.1 billion to KSh 332.8 billion, signifying the lender’s ability to appeal to customers, especially its catchment areas in the KSh 1 trillion co-operative industry.
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Performance of co-op bank is mirrored against its ongoing process to acquire the loss-making Jamii Bora Bank (JBB) with an asset base of Ksh12.5 billion ($125 million). The proposed transaction, which is still subject to both shareholders and regulatory approvals, will see Co-op Bank acquire 100 per cent shareholding of Jamii Bora Bank.
The Jamii Bora acquisition is set to increase Co-op Bank’s assets to KSh 462.5 billion ($4.62 billion). Analysts at AIB Capital Ltd, however, predict that the transaction may not have a significant impact on Co-op Bank’s books.
“We don’t think the acquisition will add much to Co-op’s balance sheet. Jamii Bora’s market share stands at 0.21 per cent and this is unlikely to have a material impact on Co-op,” said AIB Capital in a research note.
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