In the just released FY’2023 financial results, Co-operative Bank of Kenya posted a 5.2% growth in net profit to Sh23.2 billion on increased income and reduced operating costs from Kshs 22.0 bn recorded in FY’2022.
The performance was mainly driven by a 0.6% increase in total operating income to Kshs 71.7 bn, from Kshs 71.3 bn in FY’2022, coupled with a 6.1% decrease in Total Operating Expenses to Kshs 39.7 bn in FY’2023, from Kshs 42.2 bn in FY’2022
The board has on the back of the increased profit, recommended a dividend of Sh1.5 per share, amounting to Sh8.8 billion, matching that of the previous year. The dividend will be paid after the approval by shareholders in the virtual annual general meeting slated for May 17, 2024.
The Nairobi Securities Exchange-listed firm says its profit growth in the full year ended December has given it the confidence to issue higher dividends for the period.
“The strong performance has led to a sustained increase in shareholder value as reflected in the competitive return on equity of 21 percent,” said Gideon Muriuki, the managing director at Co-op Bank.
The 6.1% decrease in Total Operating Expenses was largely driven by the 30.8% decrease in loan loss provisions to Kshs 6.0 bn from Kshs 8.7 bn in FY’2022 an indication of reduced provisioning, coupled with a 9.6% decrease in other operating costs to Kshs 17.0 bn from Kshs 18.8 bn in FY’2022. The bank announced a final dividend of Kshs 1.50 per share, translating to a dividend yield of 10.7% and a dividend payout ratio of 38.1%.
The drop in costs came despite the lender expanding its staff count and branch network. Staff numbers rose by a notable 536, amid the lender’s opening of eight new branches and an additional 15 planned for this year.
Further investments in digitization saw the bank successfully upgrade its core Banking system to the latest version of Finacle from Infosys -rated among the best banking systems worldwide, said the bank. The bank said it managed to strike a healthy balance between investments in brick-and-mortar and staff growth, on the one hand, and cost containment on the other.
“The Co-operative Bank Group continues to pursue strategic initiatives that focus on resilience and growth in the various economic sectors.” Mr Gideon Muriuki added.
On the Subsidiaries performance, Kingdom Bank, which is 90 percent owned by Co-op Bank contributed a Profit Before Tax of Kshs. 1.08 Billion in FY2023, a remarkable growth of 36.4% from Kshs. 792.6 Million reported in FY2022.
The Co-operative Bank of South Sudan operates as a distinctive joint venture (JV) partnership with the Government of South Sudan, wherein Co-op Bank holds a 51% stake while the Government of South Sudan holds 49%. In FY2023, the bank recorded a Profit Before Tax of Kshs. 291.3 Million, compared to Kshs. 132.7 Million in 2022, reflecting a remarkable growth of 119.5%.
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