Over the past one decade, Kenya’s banking industry has witnessed one bank rise from the ashes like a Phoenix. That bank is the Co-operative Bank, which today is the third largest bank in Kenya, and the second in market valuation.
How did the bank, whose chief executive officer is Dr. Gideon Muriuki, manage such a mega transformation?
Bizna Kenya’s associate and resident financial analyst Robert Ochieng who is also the founder of investment and personal financial consultancy Abojani Investment takes a look at the transformative strategy behind the success of Co-op Bank:
The Co-operative Bank of Kenya is Kenya’s third largest bank by profitability and the number of branches after KCB and Equity.
The Bank was initially registered under the Co-operative Societies Act at the point of founding in 1966. It was incorporated as a limited company in 2008 paving the way for its listing at the Nairobi Securities Exchange PLC in the same year. Co-operative societies and unions own 64.5% of the bank through Co-op Holdings Co-operative Society Limited.
It is best known as the bank where Cooperative societies, SACCOs, and chamas feel at home in terms of the value proposition.
Co-op Bank wins overall prize, sweeps all prizes in Sustainable Finance awards
Co-operative Bank of Kenya runs the largest co-operative bank in Africa with 15 Million members together with SACCOs who are its majority shareholders Soaring Eagle is a transformative initiative launched by the Co-operative Bank of Kenya in 2014.
It has 8 focus areas namely
1). Branch Transformation
 2). MSME Transformation
 3). Sales Force Effectiveness
4). Shared Services & Digitization “The Digital Bank”
5). Non Performing Loans & Credit Process 6. Cost Management
7). Data Analytics 8. Staff Productivity Between 2009-2013, the bank underwent its most rapid expansion by opening 77 branches.
Customer accounts grew from 700,000 at the close of 2008 to 5.1 million at the end of 2014. Soaring Eagle Strategy was launched in 2014 as the bank was looking for new ways to transform its business and continue to create value for over 10 million households then (now 13.3 million) who are the bedrock of the cooperative movement in Kenya.
Soaring Eagle Scorecard:
a). Assets have grown from Sh. 271 billion in September 2014 to Sh. 661 billion in September 2023
b). Loans and advances grew from Sh. 175 billion to Sh. 378 billion between September 2014 and September 2023.
c). Shareholder funds funds have grown from Sh. 42 billion in Q3 of 2014 to Sh. 108 billion in Q3 of 2023. It is only the 3rd Kenyan bank with more than Sh. 100 billion in shareholder funds.
d). Digital loans disbursed in 2014 were only Sh. 200 million and the cumulative amount now is 336 billion with over 70% of that being salary advances which tend to have lower risks showing prudence.
e). 91% of the transactions are now done outside the branch.
f). 51% of its loan books consists of personal and household loans
g). Unique value proposition for MSMEs including enterprise development -profits have grown from Sh. 6.31 billion in September of 2014 to Sh. 18.39 billion in September of 2023.
The co-operative sector now contributes to 31% of the total deposits in Kenya with Sh. 1.5 trillion from the sector.
