The Co-operative Bank of Kenya (Co-op Bank) has reported a positive start to 2024, with a 7.7 per cent increase in net profit to Sh6.58 billion for the first quarter ending March 2024 compared to the same period last year.

This growth is attributed to a rise in net interest income, which climbed 8.6 per cent to Sh11.7 billion.

"The strong performance by the bank is in line with the group's strategic focus on sustainable growth, resilience, and agility," said Gideon Muriuki, Co-op Bank's Managing Director.

Controlled Costs Maintain Profitability

While net interest income rose, non-interest income remained relatively flat at Sh7.08 billion.

However, Co-op Bank effectively managed operating expenses, with a marginal increase of only 0.5 per cent to Sh9.86 billion.

This resulted in an improved cost-to-income ratio of 44.1 per cent compared to 46.3 per cent in the previous year's first quarter.

Branch Expansion Leads to Measured Growth in Expenses

The bank's cost management strategy did involve some calculated increases.

Provisioning for loan defaults rose by 4 per cent to Sh1.59 billion, and staff costs grew by 12.7 per cent to Sh4.46 billion.

This increase in staff costs is linked to salary increments and the hiring of new employees to support the opening of eight new branches in the last year.

Co-op Bank plans to add 13 more branches by the end of 2024, potentially leading to further recruitment.

"The bank continues to invest in a competitive team set to serve at existing functions and at the same time tap new growth opportunities across all areas of the business," Muriuki stated.

Subsidiaries Contribute to Positive Performance

Co-op Bank's subsidiaries also played a role in the positive performance.

Kingdom Bank, 90 per cent owned by Co-op Bank, saw its net profit for the quarter surge 33 per cent to Sh341.7 million.

Additionally, Co-op Trust Investment Services Limited reported a 47.6 per cent growth in pre-tax profit to Sh75.5 million, with funds under management reaching Sh227.2 billion.

Strong Deposit and Loan Growth

The bank experienced a healthy rise in customer deposits, with a 14.8 per cent increase to Sh481.8 billion. Net loans and advances to customers also grew by 5 per cent to Sh378.1 billion.

Shareholder Dividend Planned

Co-op Bank will hold its annual general meeting on Friday, where shareholders are expected to approve the Sh1.50 per share dividend, amounting to a total payout of Sh8.8 billion, as proposed by the board last month.

Overall, Co-op Bank's first-quarter performance demonstrates a commitment to controlled growth strategies while maintaining profitability.

The bank's expansion plans and subsidiary contributions position it for a potentially successful year ahead.