Co-operative Bank profit rises to Sh3.4 billion

The Co-operative Bank of Kenya's net profit for the three months of the year grew by 8 per cent, helped by an upsurge in lending and gains from cost-cutting measures, the lender said yesterday.

The Nairobi Securities Exchange-listed bank announced an after-tax profit of Sh3.44 billion for the three months to March 2016 compared to Sh3.17 billion posted in the same period a year earlier.

The bank’s chief executive Gideon Muriuki attributed the performance to a cost-cutting and efficiency drive initiated by the lender two years ago.

“Operational efficiencies resulting from this project have seen our cost to income ratio improve from a high of 58.8 per cent in December 2015 to 51 per cent in March 2016,” said Mr Muriuki.

“(The drive) had a critical focus on cost optimisation, improvement in operating efficiencies and innovative customer delivery platforms,” he said.

AFTER-TAX PROFIT

Equity Bank announced an after-tax profit of Sh5.1 billion in the three months to March 2016 compared to Sh4.2 billion posted in a similar period last year.

Co-op Bank’s other close rivals Kenya Commercial Bank, Standard Chartered and Barclays Bank of Kenya are set to announce their first-quarter results.

The bank, which is Kenya’s third-largest lender by assets, laid off 160 employees in 2014 in a cost-cutting drive aimed at reducing its then Sh8 billion wage bill.

The retrenchment, was done according to the recommendations of consulting firm McKinsey. Co-op bank hired McKinsey & Co in 2014 to advise on cost-cutting measures and improve its operations.

It incurred a one-off cost of Sh1.3 billion in laying off the staff in 2014 whose absence last year boosted the lender’s financial performance while also boosting its cost to income ratio to 53 per cent from 61 per cent at the time.