Co-operative Bank of Kenya sets aside Kshs 49b to cover Covid -19 debtors

Co-operative Bank of Kenya Ltd. Managing Director and CEO Mr. Gideon Muriuki

By James Kairu

The Co-operative Bank of Kenya has moved swiftly to rescue clients currently servicing loans but whose businesses and incomes have been hit adversely by the Covid-19 pandemic. The bank is to consolidate a cash outflow of at least Kshs 49b in support of borrowers hit by covid 19.

At the same time, the top lender has shrugged off a 24.5 per cent dip in full-year earnings to December 2020 while rolling out containment measures designed to mitigate 15 million customers from adverse effects of the global Covid 19 pandemic.

The bank injected Kshs 200 million into President Uhuru Kenyatta’s Big 4 mortgage plan for affordable housing for low-income earners.

The bank has already donated up to Kshs 200 million for the purchase of ventilators to the national Covid-19 emergency fund which is now battling a reported oxygen shortage in the country. The bank also injected Kshs 200 million to President Uhuru Kenyatta’s Big 4 mortgage plan for affordable housing for low-income earners.

The bank has further come to the rescue of transport operators hit by Covid -19 restrictions that include curfew and lock-down offering soft loans to purchase 45 buses plying routes in Nairobi. The bank recently scooped top award as the best lender with the largest asset base. It has won the award of Africa continental award of the most digitalized bank.

The bank has continued its expansion and digitization of all its branch outlets in Kenya, South Sudan and Burundi with a major presence in Uganda and Rwanda. The dip in profit is widely largely attributable to a higher cover for expected loan defaults with provision expenses more than tripling to Ksh.8.1 billion from Ksh.2.5 billion in 2019.

The higher defaults cover is on the back of a steep rise in the lender’s non-performing loans (NPLs) which hit Ksh.59.1 billion at the end of the year from a lower Ksh.31.6 billion.

Co-op bank has managed to grow its core revenue streams with net interest income rising to Ksh.36.3 billion from Ksh.31.3 billion while non-interest funded income (NFI) grew by 1.7 per cent to Ksh.17.5 billion. Total operating income in the year meanwhile stood at Ksh.53.8 billion from Ksh.48.5 billion.

In spite of issuing a profit-warning on the expected results, the bank has held off concerns on profitability to declare a final Ksh.1 dividend, the same as in 2019. The lender says it has restructured Ksh.49 billion in customer loans over the past 12 months as part of its support to borrowers impacted by the COVID-19 pandemic.

Co-op’s latest acquisition, Kingdom Bank Limited, returned a loss of Ksh.76.3 million but is expected to mark a turnaround in 2021. Co-operative Bank Group CEO and Managing Director Dr. Gideon Muriuki (CBS) says the bank will continue to deploy mitigation strategies including digitization in managing the current macro-economic environment.

“The Co-operative Bank Group has put in place a proactive mitigation strategy anchored on a strong enterprise risk management framework, to enable uninterrupted access to banking services,” he said.

“We shall, riding on the unique synergies in over 15-million-member co-operative movement, continue to pursue strategic initiatives that focus on resilience and growth in the new normal as the nation focuses on COVID-19 containment programs and as vibrancy returns to the economy,” he said.

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