Zachary Ochuodho @zachuodho
Cooperative Bank of Kenya’s unique model of retail banking through Sacco front Office Services Activity (Fosa) has enabled it to shore up profitability by providing financial services to more than 560 Fosa outlets.
According to Co-operative Bank Group chief executive Gideon Muriuki, the group has been able to post good performance due to the bold “Soaring Eagle” transformation project that the bank started to implement in 2014.
Speaking yesterday while unveiling the 2017 financial results in which the group posted Sh11.4 billion in after tax profit compared to Sh12.7 billion in 2016, Muriuki said the bank performed well against the backdrop of the interest rate caps and lower economic growth.
He said performance represents the tangible benefits arising from improved cost-to-income ratio which has improved from 59 per cent in 2014 to 52 per cent in 2017.
He said the total interest income reduced marginally by four per cent from Sh42.3 billion to Sh40.4 billion on account of interest income from government securities retreating by three per cent from Sh8.5 billion to Sh8.2 billion and interest income from loans and advances dropping 4.7 per cent which was the full-year effect of interest rates capping.
“The total interest expense reduced by four per cent from Sh12.8 billion to Sh2.3 billion on account of lower cost of funding. However, the non-funded income grew by six per cent from Sh12.8 billion to Sh13.5 billion as we continued the strategy of sales force effectiveness,” he said.
The group total operating income dropped by two per cent from Sh42.3 billion to Sh41.6 billion. Cost-to-income ratio was 52 per cent, similar to a period recorded in 2016 reflecting a sustained control on costs. Muriuki said the total assets grew by 10 per cent – which was Sh35 billion to Sh386.9 billion compared to Sh351.9 billion in the same period in 2016.
Net loans and advances book grew by Sh17 billion in 2017 to Sh253.9 billion compared to Sh236.9 billion in the same period last year. Government securities grew by Sh11.4 billion to Sh69.2 compared to Sh57.8 billion in 2016. Total deposits grew by nine per cent from Sh263.6 billion to Sh287.7 billion.