By James Wafula in Nairobi.
Kenya’s fastest growing digitized bank by assets, Cooperative bank, has issued a profit warning following a tough year that saw the bank’s expenses rise faster than its income.
In a public statement, the bank said that its “full-year earnings for the 2020 financial year are projected to be materially lower than the earning reported on for the same period in 2019.”
Cooperative bank is the latest Kenya bank to give a profit warning after KCB Group, Diamond Trust Bank, HF Group, Absa Bank, Standard Chartered Bank, NCBA Group, and I&M Holdings issued alerts last month, blaming covid 19 pandemic for the projected weak financial performance.
But Cooperative bank is said to have weathered the covid 19 storm fairly enough and even successfully acquired 90% ownership in Jamii Bora Bank at a cost of KSh 1 billion in August 2020. The lender’s operating expenses rose sharply in the third quarter of 2020 to KSh23.5 billion, an 18.3% YoY increase, while its operating income only expanded by 5.6% to KSh 37.2 billion in the same period.
Coop bank said it managed to move 90% of its customer transactions away from banking halls to alternative channels such as agent banking, mobile banking and online banking.
Hyperinflation in neighboring South Sudan significantly affected Coop banks’ performance due to currency translation losses. The bank also recorded a huge increase in loan loss provisions due to the challenging business environment created by the pandemic.
The top tier lender is confident that the measures taken to mitigate the effects of the pandemic will enable the business to sustain growth in the future. The bank has recently divested into the transport and housing sectors while also putting aside billions to rescue SMES (small and medium enterprises) through IFC from the devastating effects of the covid 19 global pandemic.
At the start of the national emergency response to Covid 19 Coop donated Kshs 200 million for buying ventilators and had earlier pumped Kshs 200 million into President Uhuru Kenyatta housing mortgage as part of the Big 4 agenda■