Co-op Bank Leads Q3 2022 with Highest Net Profit Growth in Kenya

: Co-op Bank Leads with 47% Profit Growth in 2022, Followed by Equity Group and KCB as Kenya’s Top Banks Record Strong Performance

By Charles Wachira

In the nine months running to September 2022 Cooperative Bank of Kenya registered the biggest % in net profit growth followed by  Equity Group Holdings PLC   with Kenya Commercial Bank emerging third.

Co-op Bank as the Cooperative bank is widely known saw a 47 % growth as its net profit soared to Ksh 17 billion (US$138,979,724.30) from Ksh 11.6 Billion (US$ 94,833,223.64) recorded a year earlier.

“The performance delivers a competitive return on equity of 23 per cent to our shareholders… The strong performance by the bank is in line with the group’s strategic focus on sustainable growth, resilience and agility” said Co-op Bank chief executive Gideon Muriuki in a statement released Nov 17 during an investor briefing held in Nairobi.

During the period the bank’s cost to income ratio improved to 45.8 % compared to 49.3 % registered the previous year during the accounting period which also was an improvement to the 59 % chalked in 2014 when the lender embarked on its growth and efficiency strategy that is underlined by the digitization of services.

“Through our digital channel strategy, the bank has successfully moved 94 % of all customer transactions to alternative delivery channels, a 24-hour contact centre, mobile banking, 550 ATMs, Internet banking and a wide network of Co-op Kwa Jirani agents,” said Dr. Muriuki. 

Co-op Bank, Kenya’s third-largest bank in asset size, saw its total assets grow by 5 % to Ksh 622.1 billion (US$ 5,089,365,262.40) compared to Ksh 592.9 billion (US$ 4,850,481,697.60) registered in the same period the previous year. 

Meanwhile the net profit of   Equity Group Holdings during the nine months period improved by 26.61% recording Ksh 33.35 billion (US$ 272,834,482.40) compared to Ksh 26.3 billion (US$ 215,158,827.20) a year earlier, largely helped by a surge in fees and commissions on banking transactions, forex trading and interest income from investments in government. 

The group’s total income earned on fees and commissions grew by 28 % to Ksh 26.74 billion ($219.18 million) from Ksh20.79 billion ($170.4 million) while foreign exchange trading income increased by 57 % to Ksh 8.89 billion ($72.86 million) from Ksh 5.64 billion ($46.22 million).

While the Group’s earnings from its investments in government securities (Treasury bills and bonds) grew by 43 % to Ksh 29.57 billion ($242.37 million) from Ksh20.66 billion ($169.34 million) in the same period.

With total assets of the Group recording a 15.2% growth as customer deposits surpassed the Ksh 1.0 trillion mark for the first time since the bank’s founding. Loans and advances to customers grew by 21% to reach Ksh 673.9 billion (US$5,513,138,161.60)

The increase in Equity’s lending activity was largely driven by the Congolese unit, which recorded a 50% loan book growth to Ksh 151.6 Billion.

Equity Bank, which is the largest lender in the region in assets saw its earnings per share rise to Ksh 8.84(US$ 0.072) from Ksh 6.98 ( US$ 0.057)  recorded in  2021 during the same period.

In an investor relations briefing held Nov 22 at its Nairobi Headquarters,Dr. James Mwangi , the CEO said, “Continuous pursuit of efficiency gains and our business transformation strategy has repositioned the business for value creation and strategic growth.|”

In the nine months period the net profit earnings of the KCB Group, which is Kenya’s second largest by assets, grew by 21.4 % mainly driven by growth in net interest and non-funded income, registering Ksh 30.6 billion (US$ 250,336,886.40) up from Ksh 25.2 billion (US$ 206,159,788.80 )the previous year.

“We are seeing strong revenue momentum across the corporate and retail business which positions us to meet our full year outlook. Our focus has been on delivering value and support to our customers to help them navigate the tough economic environment”, said KCB Group CEO Paul Russo 15th November during an investor relations briefing held on November 15 in Nairobi.

Non-funded income increased by a third on higher foreign exchange earnings and lending fees. Additionally, interest income grew mainly from increased earnings from loans disbursed during the period and investment in government securities.

KCB Group’s balance sheet went up 13.7% with total assets now at Ksh 1.28 trillion largely driven by growth in loans, investment in government securities funded by growth in customer deposits and additional borrowings. Net loans and advances went up 16.4% to Ksh 758.8 billion (US$ 6,207,700,307.20) from additional lending to the personal, building & construction and manufacturing sectors.

Customer Deposits increased by 7.4% to Ksh 922.3 billion (US$ 7,545,284,651.20)  on higher deposits from the growth of current and savings accounts.

“Our focus has been on delivering value and support to our customers to help them navigate the tough economic environment,” said Russo.

KCB Group has presence in six countries including a representative office in Ethiopia

According to the KCB Group Chairman Andrew Wambari Kairu, the lenders’ deliberate focus on cost management, enhanced digital capabilities and customer obsession, “ continues to give the business a springboard for further growth and to close the year stronger. We are optimistic of continued revenue growth across all our businesses, with projected GDP growth in all markets amidst currency depreciation and high inflation in most of the countries we operate in.”

Keywords:Co-op Bank profit growth 2022:Equity Group Holdings performance

KCB Group net profit increase:Kenya banking sector asset growth:CEO quotes investor briefings 2022