Co-op Bank full year earnings drop 10 pc on lower loans income
Co-operative Bank of Kenya #ticker:COOP has announced a 10.24 per cent drop in net profit in the year ended December which the lender attributed to lower interest income, a consequence of the rate capping regime and slowed economic activity.
Co-op Bank’s net profit stood at Sh11.4 billion in the period compared to Sh12.7 billion the year before.
The bank joins other tier one lenders which have reported near flat or reduced profits in wake of the rate capping law that has seen lenders record reduced margins.
KCB Group #ticker:KCB reported a Sh19.7 billion net profit for 2017, a flat year-on-year performance on the back of the effects of the interest rate capping law and restructuring costs.
Barclays Bank of Kenya (BBK) #ticker:BBK, the first Kenyan lender to announce its full-year results, recorded Sh6.93 billion after-tax profits for last year, representing a 6.4 per cent drop in year-on-year profitability that resulted from lower income.
Co-op Bank’s performance came as the loan book expanded by Sh17 billion to Sh253.9 billion compared to Sh236.9 billion in the same period last year.
“This is a commendable performance against the backdrop of one of the most challenging operating environments that business had to contend with in the year with interest rate caps and lower economic growth in an election year,” said chief executive Gideon Muriuki on Thursday.
Co-op Bank’s total interest income reduced marginally by 4 per cent from Sh42.3 billion to Sh40.4 billion as interest income from government securities retreated by 3 per cent from Sh8.5 billion to Sh8.2 billion.
Interest income from loans and advances dropped 4.7 per cent on the back of the effect of interest rates capping.