Co-Op Bank Group suffers financial glitch in 2017, remains unbowed
The Co-Operative Bank Group registered a gross profit of Shs 16.4 Billion in the 2017 financial year, dropping from Shs 17.7 Billion recorded in 2016.
A statement from the Group CEO Dr Gideon Muriuki ties this blip to the challenging business environment encountered during the 2017 electioneering period.
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His statement reads in part: “The Co-operative Bank Group notes that the environment for doing banking business has become progressively challenging, with the capping of interest rates and more lately the implementation of the IFRS 9 Accounting Standard.”
However, the Group has alleviated any alarms hinting that the 7.3% marginal drop in profit may have been even on the positive side given the tough circumstances over the period of the elections.
“This is a very 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,” reads part of the statement from the Group.
The Group made Shs 11.4 Billion profit after tax, a figure which is lower from the previous year’s Shs 12.7 Billion.
The financial glitch has been attributed to various sorts of reductions on certain interests. Statement notes that over the financial year, there was a 4% fall in total interest on income which was signified by reduction from Shs 42.3 Billion to Shs 40.4 on account.
Another financial hit emerged from the 3% fall in interest on income from government securities being Shs 8.5 Billion to Shs 8.2 Billion blip. Thirdly, it noted a drop in number of clients going for loans and advances thereby stifling revenue from such source.
Having suffered from adverse economic impacts during the last elections, Co-OP Bank has embarked on customer retention strategy targeting their 7 million clients across the country and beyond. Such would include digital banking platforms and innovative financial solutions appealing to the clients.
The Group has also set its eyes on regional expansion. Co-Operative Bank of South Sudan is an instance of such initiative, where, South Sudanese government co-owns shares with the Group on 49% to 51% respectively. But a statement from the bank reveals unspecified degree of loss may have been registered out of the venture.
It is not a doom and gloom affair as the bank had some positives over the financial year. One of them being 10% increase in in assets, being Shs 35 Billion surge, from Shs 386.9 Billion to Shs 351.9 Billion over the two years.
Besides this, major milestones such as winning the Kenya Bankers Association Sustainable Finance Catalyst Awards 2017 as the leading banking institution with reliable sustainability strategies are masterstrokes to positive performance.