Cooperative Bank net profit has increased by 18.95 percent to Kes11.63 billion for the nine months to September but sharp rise in bad loans has left the lender nursing a dent in asset quality.
In its third quarter results, the bank reported a 15.57 percent increase in total operating income which closed at Kes44.40 billion supported by interest income from loans and government securities.
In the period under review, however, Coop Bank’s portfolio of non-performing loans (NPL) swelled by 23.16 percent to Kes49.48 billion, worsening its NPL ratio that closed at 14.61 per cent well above the industry average of 14 percent.
In the trading period, customer deposits grew 11.98 percent to Kes420.44 billion while the loan book recorded 7.77 percent increase to Kes306.32 billion.
Coop Bank’s subsidiary, Kingdom Bank, was on a rebound in the third quarter results, posting Kes413.34 million net profit from a loss of Kes200.90 million which it suffered at a similar period last year.
Kingdom Bank’s total operating income closed at Kes2.5 billion with net interest income at Kes2.1 billion and non-funded income at Kes392.2 million.
Kingdom Bank’s balance sheet, however, remained flat at Kes30.97 billion, the financial data shows.
After largely going slow on provisioning for loan loss last year, Coop Bank has now gone against the banking industry trend by increasing cover for defaults by 50.35 percent to Kes6.04 billion.
Analysts attribute this to the lender’s vast exposure in providing loans to the micro, small and medium enterprises sector in Kenya.
In the period, income from fees and commissions drove the bank’s non-interest income up by 15.6 percent to Kes15.73 billion.
Further, the lender’s interest income grew faster at 21.59 per cent to Kes39.58 billion attributable to a 40.33 per cent growth in interest from government securities, resulting to an upswing in yield on interest earning assets to 7.6 per cent.