Equity and Co
Equity Bank
Gideon Muriuki
KCB and Co-op Bank
Kenya Commercial Bank
Nairobi Securities Exchange
South Sudan

Co-op Bank’s Q1 profit goes up six per cent

The lender, which is listed on the Nairobi Securities Exchange (NSE) made a profit-after-tax of Ksh3.4 billion ($34 million) up from Ksh3.2 billion ($32 million) in the same period last year. This was attributed to earnings from its investments in government securities and interest on loans and advances to customers.

Equity Bank posted a 21.7 per cent growth in net profit to Ksh5.9 billion ($59 million) while Kenya Commercial Bank’s profit after tax grew 14.1 per cent to Ksh5.1 billion ($51 million) over the same period.

According to its unaudited financial statements released last week, Co-operative Bank’s total interest income grew by nine per cent to Ksh10.4 billion ($104 million) from Ksh 9.5 billion ($95 million) while interest income from government securities increased by 13.4 per cent to Ksh2 billion ($20 million) from Ksh1.76 billion ($176 million).

Its non-interest income from fees and commissions levied on banking transactions grew four per cent to Ksh3.52 billion ($35.2 million) from Ksh3.39 billion ($33.9 million) while total operating income increased by 8.4 per cent to Ksh10.9 billion ($109 million) from Ksh 10 billion ($100 million).

“This is a very commendable performance as the operating environment gradually recovers from the significant headwinds that business had to contend with in year 2017,” said Gideon Muriuki, the bank’s chief executive.

The subsidiary is a joint venture between Co-operative the Bank Kenya and the government of South Sudan, in which the two entities hold 51 per cent and 49 per cent stakes respectively.

Co-op Bank has 7.2 million customers and has declared a dividend payment of Ksh0.8 ($0.008) per share to its shareholders for last year.

Its stock on the NSE traded at Ksh18.25 ($0.18) per share on May 24 last week compared with the listing price of Ksh9.50 ($0.09) per share.

Equity Bank and KCB were trading at Ksh49.25 ($0.49) per share and Ksh46.75 ($0.46) per share respectively over the same period.

According to Moody’s, three Kenyan large banks — KCB, Equity and Co-operative — have capital buffers that support their overall solvency and their ability to withstand unexpected losses.

“Despite their different business models and areas of vulnerability, we expect all the three banks to maintain healthy profits and strong capital, which will continue to provide substantial protection against downside risks and contribute to support their credit quality,” said Moody’s.

Equity Bank has reduced its risk-taking, with new deposits being channelled into government securities while KCB and Co-op Bank have continued to grow their loan books in the consumer and corporate lending segments, despite the challenging operating environment.

According to Moody’s, Co-op Bank’s profitability continues to be supported by its entrenched domestic franchise and the ongoing benefits from its transformation strategy.

Banking stocks in Kenya are currently facing increased demand due to reduced political jitters, falling inflationary pressures and news that interest rate caps are likely to be reviewed.

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