Co-operative Bank withered a very challenging economic environment to post a full-year pretax profit of 16.4 billion shillings in 2017, representing a 7.3 percent dip.
Chief Executive Gideon Muriuki says the results were commendable against the backdrop of a challenging operating business environment highlighted by the interest rate caps and lower economic activity in an election year.
Interest Cap Law
The Banking Amendment Bill that came into force in October 2016 capping interest on loans at not more than four percent of the Central Bank Rate has caused hue and cry among banks.
The law has seen most banks drastically reduce lending to risky customers, which when coupled with the long electioneering period last year has seen banks return either flat or a dip in profits.
Highlights
Among the key highlights is that total interest income dipped marginally by 4 percent to 40.4 billion shillings on account of the effect of interest rates capping.
This was despite net loans and advances increasing 7 percent to 253.9 billion shillings and total deposits growing by 9 percent to 287.7 billion shillings.
Non funded income grew 6 percent to 13.5 billion shillings while total operating income dipped 2 percent to 41.6 billion shillings.
Co-operative Bank of South Sudan saw its pretax profit rise 135 percent to 192 million South Sudanese Pounds which however translates to a monetary loss of 603 million shillings attributable to currency devaluation.
Alternative Delivery Channels
Muriuki says the bank has successfully moved 87 percent of all customer transactions to alternative delivery channels that include an expanded 24-hour contact center, mobile banking, ATMs, internet and over 9,000 Co-op Kwa Jirani banking agents.
Muriuki says the lender will leverage on the growing customer base, digital banking focus, efficient delivery of services and multichannel access to deliver business growth.
Cooperative bank has recommended the payment of 80 cents per every ordinary share held in dividends subject to shareholder approval.