Co-operative bank registered a net profit of Ksh. 7.2 billion in the first half of the year down from Ksh. 7.5 billion garnered in a similar period in 2019.
The lender has attributed the 3.6 percent performance drop to increased provisioning for bad debt. The jump in provisioning downplayed solid earnings from the Group’s mainstay lending business, which saw net interest income increase by 12 percent to Ksh.15.9 billion from Ksh.14.3 billion posted in a similar period in 2019.
Co-op Bank Group CEO Gideon Muriuki has coined the performance as solid, despite the bank’s loan provision increasing by 57.9 percent to Ksh. 1.87 billion owing to the economic effects of the Covid-19 pandemic.
“This strong performance is an affirmation of the resilience of the business in view of the most challenging operating environment occasioned by the Covid-19 pandemic that has brought about unprecedented economic and social disruption,” said Mr. Muriuki in a statement.
Co-op bank becomes the second local lender to recently record a dip in net earnings in the first six months of the year after KCB Group. KCB Group registered a net profit of Ksh. 7.5 billion in the first six months of the year a 40.2 percent dip from the Ksh. 12.6 billion it posted in a similar period in 2019. The country’s largest bank by assets linked the drop to increased provisioning for bad debt which has seen the lender’s provision for bad loans quadruple from Ksh. 3 billion to Ksh. 12.6 billion in the period.
Co-op bank is currently in the process of acquiring a 90 percent stake in lender Jamii Bora after the deal received all required regulatory approval. Cooperative Bank will acquire a majority stake in the lender on August 21 after initially opening talks to acquire the shares in March. The lender has implied that the deal will be used to augment micro small and medium-sized entities banking, microfinance, youth and women banking, asset finance and leasing.
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