Co-operative Bank Group has posted Ksh 14.3 billion profit before tax for the financial year 2020 compared to Ksh20.7 billion recorded in 2019, and a profit after tax of Ksh10.9 billion compared to Ksh14.3 billion in 2019 financial years.
The profit after tax for the financial year 2020 has declined by 24 per cent owing to increased Covid-19-related loan loss provisions and the absorption of currency translation losses in South Sudan operation.
The Group has taken loan loss provisions of Ksh 8.5 billion, being a 235 per cent increase from Ksh 2.54 billion in 2019 in appreciation of the challenges that businesses and households are grappling with from the disruptions occasioned by the ongoing pandemic.
A total of Ksh 49 billion in loans have been restructured to support customers impacted by Covid-19 pandemic.
“We continue to actively engage our customers to support them through this period, by re-aligning the servicing of facilities, funding and transactional needs as the situation unfolds,” explained Mr Gideon Muriuki, Chief Executive Officer.
Co-operative Bank of South Sudan, which is a unique joint venture (JV) partnership with the Government of South Sudan (Co-op Bank 51 per cent and GOSS 49 per cent), made a Profit before tax of Ksh107.8 million in 2020.
The performance however translated to a monetary loss of Ksh 1.65 billion attributable to hyperinflation accounting occasioned by currency devaluation of the South Sudanese Pound.
The recently acquired subsidiary Kingdom Bank (former Jamii Bora Bank) made a profit after tax loss of Ksh 76.3 million for the year.
Besides increased loan-loss provisions, the Bank also attributed the drop in profitability to subdued economic activity arising from the adverse effects of the Covid-19 pandemic. The Bank is looking forward to a better year 2021.
Despite the profit drop, Co-op Bank, which is listed at the Nairobi Securities Exchange, announced a dividend of Ksh1 per share, which would see it pay a total of Ksh5.9 billion to its shareholders. The bank is majority-owned by co-operative societies countrywide.
“This will be a much-needed relief in a pandemic year to the over 15 million-member co-operative movement that predominantly owns the bank,” explained Mr Muriuki.
He added, “Besides the increase in loan loss provision, used as insurance against possible defaults, the bank’s bottomline also suffered from currency fluctuations in its South Sudan operation. We went through a difficult time, but when the going gets tough, the tough get going.”