Co-operative Bank of Kenya has posted a 5.3 percent growth in net profit to Sh6.9 billion in the first quarter ended March as a faster rise in interest income reduced the impact of the jump in operating costs.
The growth in net profit from Sh6.6 billion recorded in a similar quarter last year came on the back of net interest income growing 21.7 percent to Sh14.2 billion.
“The strong performance by the bank is in line with the Group’s strategic focus on sustainable growth, resilience, and agility,” Co-op Bank’s chief executive Gideon Muriuki said of the performance in the first quarter.
The bank is holding its annual general meeting on Friday, where one of the resolutions to be put before shareholders is the declaration of a dividend of Sh1.5 per share for the year ended December 2024.
"Over the past five years, our average dividend payout ratio has been 40 percent, balancing investor returns with re-investment for long-term growth," Co-op Bank said.
The performance momentum in the first quarter puts the lender in a position to maintain or grow payouts to shareholders.
In the quarter under review, non-interest income from fees and commissions retreated marginally by 1.9 percent from Sh7.1 billion to Sh6.9 billion.
Co-op Bank, which is listed on the Nairobi Securities Exchange (NSE), registered a growth of 12.8 percent in its total operating income from Sh18.8 billion to Sh21.2 billion.
Operating expenses grew by 19.1 percent from Sh9.9 billion to Sh11.7 billion, weakening the group’s cost-to-income ratio to 45.5 percent from 44.1 percent in the same period in 2024.
Faster growth in operating costs, combined with a drop in non-funded income, slowed the lender’s growth in net profit. In the first quarter of 2024, profit after tax grew by 7.7 percent.
Co-op Bank’s profitability in the quarter to March 2025 was also helped by the subsidiaries, including Kingdom Bank, which is 90 percent owned by the Kenyan banking multinational.
Mr Muriuki has in the past credited various cost management initiatives for the group's growth, with the lender improving its cost-to-income ratio from 59 percent in the financial year 2014, when it started its growth and efficiency programme.
Co-op Bank, whose anchor shareholder is the co-operative movement, recently linked an additional 135 savings and credit co-operatives (Saccos) to its banking platform.
In a statement, the listed lender said it had linked 619 Saccos with front office services activity (Fosa) in the year ended 2024, up from 484 a year earlier.
Sacco members with Fosa accounts are able to access additional financial services, including withdrawing cash at ATMs and receiving salaries.
Besides being shareholders of Co-operative Bank, Saccos form a major client base for the lender, earning a substantial part of their income in the form of dividends.
Co-op Bank’s loan book in the first quarter grew 1.7 percent to Sh384.5 billion compared to Sh378.1 billion a year earlier.
Its total assets grew to Sh774.1 billion, an 8.3 percent growth from Sh714.7 billion in the same period last year.
Customer deposits grew to Sh525.2 billion, a nine percent increase from Sh481.8 billion, while shareholders’ funds grew to Sh155.9 billion, a 22.7 percent increase from Sh127.1 billion.
