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Co-op Bank Saves Customers With New Ksh39.2Billion Loans

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Co-op Bank Group on Friday August 14 restructured loans worth Ksh39.2 billion to support borrowers battered by the adverse effects of the coronavirus pandemic.

Speaking while releasing the lender’s financial results for the second quarter ended June 30, Co-op Bank Group MD Gideon Muriuki said the pandemic has presented a tough operational environment hurting revenue streams for most clients.

‘’We are actively engaging our customers to support them through this period by re-aligning servicing of facilities, funding and transactional needs as the situation unfold,’’ Muriuki revealed.

CO-OP bank group MD Gideon Muriuki. Source: The Star

In Mid-March, the Central Bank of Kenya allowed lenders to offer relief to distressed customers after the first COVID-19 case was reported on March 13.

This was part of measures adopted by the government to support Kenyans from a looming economic crisis caused by the outbreak of the disease in the country.

According to CBK, the total loan restructured by end of June stood at Ksh2.9trillion of the total banking sector loan book from Ksh679.6billion in May

Personal and household loans topped the list at Ksh240 billion, an equivalent of 30 per cent of all loans in the sector while other sectors saw loans worth Ksh604.4 billion restructured.

Banks have now started feeling the impact of the tough economic times, with Co-op Bank for instance forced to take a higher loan loss provision of Ksh1.9 billion during the period under review compared to Ksh1.18 billion same period last year, an increase of 57.9 per cent.

A banking hall at one of Co-op bank’s branches. Source: File

This slightly dented the bank’s net profit for the period, which fell to Ksh7.2 billion compared to Ksh7.5 billion in the corresponding period last year, representing a 3.6 per cent drop.

Consequently, this saw the lender’s gross earnings shrink marginally to Ksh9.6 billion compared to Ksh10.4 billion last year.

Even so, the drop in profits for Co-op Bank is least compared to others, which have since announced their half-year results.

Muriuki said the strong performance is an affirmation of the resilience of the business in view of the most challenging operating environment occasioned by the COVID-19 pandemic.

He added that they continue to implement proactive enterprise risk management initiatives to ensure uninterrupted business operations.

‘’We have fortified our digital channels to support uninterrupted access to banking services by our customers. At least 90 per cent of services are away from counters,’’ Muriuki went on.

During the period under review, the bank’s income grew to Ksh24.2 billion from Ksh23 billion while net interest income rose by 12 per cent to Ksh15.9 billion.

The bank’s total assets grew by a whopping Ksh84.3 billion to hit Ksh514 billion compared to Ksh430 billion the same period last year.

The lender continued to advance loans despite increased uncertainties in the market with the report showing that its loan book grew by six per cent to Ksh272.2 billion from Ksh257.6 billion.

Investors’ fund grew by Ksh80.1 billion from Ksh71 billion similar period last year, enabling the lender to continue pitching for big-ticket deals.

Its operating expenses however grew by 16 per cent from Ksh12.6 billion to Ksh14.6 billion especially on higher loan loss provision.

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