Financial services provider, Co-operative Bank of Kenya has announced a marginal increase of 0.46 per cent in its pretax profit.
In its full year 2014 results, Kenya’s third largest lender by asset size reported that its pretax profit was a little unchanged at 10.92 billion Kenya shillings in comparison to a similar period in 2013. The bank attributed this meager rise to a staff retrenchment cost of 1.34 billion Kenyan shillings.
Co-op’s total assets grew by 23.4 per cent to 285.4 billion Kenyan shillings compared to 231.2 billion Kenyan shillings in the previous year.
Buoyed by its mobile money banking services, ATM commissions, among others, non-funded income grew by 16.7 per cent to 10.8 billion Kenyan shillings, while fees and commissions on loans, advances and other commissions grew by 22 per cent.
The lender’s net loans and advances grew by 31 per cent to 179.5 billion Kenyan shillings compared to 137 billion Kenyan shillings in the previous year.
While the lender recorded a loss in 23 of its branches including those based in South Sudan that recorded a loss of 500 million Kenyan shillings in its first ever full year results, the lender will open an additional three branches in the country this year.
“South Sudan’s market is big and growing and it has a lot of promise. We expect in the first quarter results of the year for South Sudan to perform well,” Gideon Muriuki, group managing director and CEO said.
Last year, the bank hired McKinsey & Company to guide it on its next phase of growth. The three month engagement has seen it emerge as a more efficient player in the industry. Recommendations by the New York-based consultancy firm are anticipated to play a pivotal role in the lender’s five-year strategic plan.
“The transformation the bank is going through is very exciting and will undoubtedly propel us to new frontiers,” Muriuki said.
The lender’s ‘Soaring Eagle Transformation Project’ which is being implemented has the bank anticipating for at least 30 per cent in profitability this financial year including a loans and advances growth of 25 to 30 per cent.
Speaking to CNBCafrica.com, Eric Munywoki, research analyst at Old Mutual Securities agrees that the implementation of Co-op’s new strategy will propel the lender to greater heights.
“We are seeing a positive stand by their strategies and by mid-2016 we will see profitability,” Munywoki said.