Higher lending, cost management propel Coop net profit to Sh11.7 b

Corporate News

Cooperative Bank of Kenya group managing director Gideon Muriuki. FILE PHOTO | DIANA NGILA |  NATION MEDIA GROUP

By GEORGE NGIGI, gngigi@ke.nationmedia.com

In Summary

• NSE-listed lender's profit jumps 46 per cent two years after it hired McKinsey & Co to advise on cost cutting measures and improve its operations.

Co-operative Bank’s net profit for the year ended December 2015 jumped 46 per cent helped by increased lending and cost cutting.

The NSE-listed lender announced an after-tax profit of Sh11.7 billion compared to Sh8 billion posted a year earlier.

Company management proposed an increased dividend payout to Sh0.80 per share up from Sh0.50 the previous year.

“The performance by the group is on the back of gains from improving operational efficiencies, reduced operating costs and improved customer delivery platforms,” said the bank’s chief executive Gideon Muriuki.

The bank’s loan book grew by 16 per cent to Sh208 billion resulting in an increase in interest income to Sh36.7 billion.

Customer savings with the bank rose to Sh268.8 billion from Sh220.8 billion a year earlier. The bank paid out interests of Sh13.5 billion leaving it with net interest income of Sh23.3 billion.

Its operating income grew by Sh4.3 billion to Sh36.3 billion with expenses rising at a slower pace, Sh1.3 billion leading to a Sh3 billion expansion in net operating income.

Co-op bank hired McKinsey & Co in 2014 to advise on cost cutting measures and improve its operations.

READ: Co-op sees Sh1.8bn boost after McKinsey reforms

It incurred a one-off cost of Sh1.3 billion in laying off staff in 2014 whose absence last year boosted the lenders financial performance while also boosting its cost to income ratio to 53 per cent from 61 per cent.

READ: Co-operative Bank mulls entering Rwanda as early as 2016