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Co-op joins list of Kenyan banks reporting lower Q1 net profit

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Co-operative Bank of Kenya group managing director Gideon Muriuki. FILE PHOTO | DIANA NGILA | NMG

Co-operative Bank of Kenya group managing director Gideon Muriuki. FILE PHOTO | DIANA NGILA | NMG 

By James Anyanzwa

Posted  Thursday, May 18   2017 at  20:46

In Summary

  • Co-operative Bank has reported a 6 per cent plunge in net profit for the first three months of 2017 to Ksh3.2 billion ($32 million) from Ksh3.4 billion ($34 million) recorded similar period last year.
  • Other banks that have recorded lower earnings in the same period include KCB, Stanbic and NIC.

Kenyan banks continue to suffer in the wake of interest rate cap law, which took effect in September 2016, to report a decline in quarter-one earnings.

Co-operative Bank, on Thursday, reported a 6 per cent plunge in net profit for the first three months of 2017 to Ksh3.2 billion ($32 million) from Ksh3.4 billion ($34 million) recorded similar period last year.

Its interest income from loans and advances also fell by 7.7 per cent.

The bank attributed the decline to the interest controls as well as hyperinflation in war-torn South Sudan.

Its Juba subsidiary posted a loss of Ksh34.7 million ($347,000) due to the devaluation of the South Sudanese currency following economic turndown as a result of a prolonged civil war.

The lender’s managing director Gideon Muriuki said the performance came “against a backdrop of a tighter operating environment especially with the capping of interest rates and currency devaluation and hyperinflation on our operations in South Sudan.”

Co-op joins three other Kenyan banks that have reported a drop in their Q1 2017 earnings.

KCB Group, last week, posted a 1.9 per cent drop in its net profit for the period to Ksh4.54 billion ($45.4 million) from Ksh4.63 billion ($46.3 million).

Earlier, NIC Bank had reported that its net earnings for Q1 2017 had dropped by 3.9 per cent to Ksh952 million ($9.52 million).

Stanbic bank also reported a 9.24 per cent plunge in net profit for the same period to Ksh1.08 billion ($10.8 million).

But for Diamond Trust Bank (DTB), it announced Thursday, a 9 per cent growth in net profit to Ksh1.75 billion ($17.5 million) from Ksh1.6 billion ($16 million).

Its interest income on loans though fell 11 per cent to Ksh5.47 billion ($54.7 million) from Ksh6.19 billion ($61.9 million).

The lenders are now turning to technology to grow business.

“We continue with our focus on digital banking which will ensure timely, business-led solutions delivery to our customers,” Mr Muriuki said Thursday.