KENYA – Co-operative Bank, a retail and commercial bank in Kenya, reported a 5.5 percent growth in net profit for the first nine months of 2019 to KSh10.9 billion (US$109m), majorly lifted by strong growth in non-interest income.

Total non-interest income, mainly from fees and commissions on loans and advances, rose by 33.3 percent from KSh10.5 billion (US$105m) to KSh14.1 billion (US$141m).

Group CEO Gideon Muriuki said its all-telco mobile wallet dubbed MCo-op cash was pivotal in the growth of non-funded income as registered customers hit 4.7 million, helping it disburse loans valued at over KSh27.6 billion (US$276m) as at end of the nine months.

“The group has continued with a strategy for continued deepening and dominance in our domain market segment leveraging our successful penetration of the micro, medium and small enterprises and the saccos while reviewing opportunities to grow alternative income streams from other services,” said Mr Muruiki

The growth in bottom line was despite total interest income dropping marginally by 1.6 percent to KSh30.4 billion (US$304m) even as loan book expanded by six percent to KSh268.9 billion (US$2.68bn).

However, interest income from government securities was up 18.1 percent to KSh8.2 billion (US$82m) as investment in government paper grew by 13.7 percent to KSh94.6 billion (US$946m).

Income from deposits and placements with other banking institutions nearly doubled to KSh340 million (US$3.4m) from the previous period’s KSh172 million (US$1.72m).

Co-op’s South Sudan joint venture in which it owns 51 percent stake made a before-tax profit of KSh174.7 million (US$1.74) compared with KSh235.12 million (US$2.35m) posted in a similar period last year.

Mr Muriuki projected more business growth and profitability riding on increased lending and efficient delivery of services using alternative channels such as mobile banking.

“The repeal of the interest rate caps has added impetus to the growth of the economy,” he said, projecting a faster pace of growth in the loan book.

During the period, operating expenses grew 11 percent to KSh19.8 billion (US$198m) on account of higher provisioning for non-performing loans.

Gideon said the bank is optimistic of better performance going forward powered by the repeal of the Interest Rate Caps.