BY EURIDICE NZIOKA,17TH AUG 2017-Cooperative Bank posted a 1.1 billion shillings drop in half year profit before tax to 9.3 billion shillings down from the 10.4 billion shillings recorded in the same period last year.
Group Managing Director Gideon Muriuki however says this was a commendable performance against the backdrop of a tight operating environment especially with the capping of interest rates, a general economic slowdown in an election year, currency devaluation and hyperinflation in South Sudan.
The introduction of the interest rates capping law continues to be a thorn in the flesh for local banks which have since recorded reduced earnings, with the situation further aggravated by the tumultuous political temperatures witnessed this year.
Cooperative Bank, the country’s second largest lender by market share has also not escaped the tough operating environment posting a 1.1 billion shillings drop in half year pre-tax profits to 9.3 billion shillings down from the 10.4 Billion shillings recorded in the same period last year.
Nevertheless, Muriuki says this was a commendable performance with the challenges mitigated by the benefits arising from the successful execution of its Soaring Eagle Transformation project.
In addition, Muriuki notes that the switching of over 90% of customer transactions to alternative delivery channels particularly mobile banking, ATMs, internet, and Co-op KwaJiranibank agency outlets highly contributed to increased business for the bank.
With customers now earning up to 7 percent interest spreads on their deposits, the bank saw customer deposits grow by 3 percent to 287.2 billion shillings compared to the 279.6 billion shillings recorded in the same period last year with shareholders’ funds also recording an impressive growth of 11.3%.
Despite the capping of interest rates on loans, the bank’s net loans and advances book grew by 14.2 % to 252.6 billion shillings compared to 221.3 Billion shillings in the same period last year.