Co-operative Bank remains optimistic during this coronavirus period after it shared a profit warning announcement in a statement to shareholders.
“The board of directors of Co-op Bank wishes to announce that the bank’s full year earnings for the 2020 financial year are projected to be materially lower than the earnings reported for the same period in 2019,” the bank disclosed in line with regulations.
The bank cited a difficult operating environment in 2020 primarily due to the shocks of the Covid-19 pandemic.
Loan loss provisions were much higher due to challenges faced by businesses and households with obligations to the bank. The bank also absorbed currency translation losses in its South Sudan business due to hyper-inflation.
Notably, however, Co-op Bank saw sustained balance sheet growth, with its asset base crossing Ksh510 million.
The expansion was supported by a loan book of Ksh284 billion and total deposits of over Ksh380 billion from over 8.8 million customers across all sectors.
Co-op Bank also successfully completed the acquisition of Kingdom Bank Limited, formerly Jamii Bora Bank, and its 17 branches across the country.
Co-op noted that the acquisition of a fully-fledged bank afforded them greater opportunities to cross-sell and deepen product offerings to an enhanced customer base.
The bank, however, admitted that the disruption caused by the pandemic had occasioned unique challenges to both Kingdom Bank and its customers.
“Co-op Bank continues to implement proactive enterprise risk management initiatives in this regard, to ensure uninterrupted business operations,” they noted.
Importantly, the Co-op Bank aggressively shifted transactions to digital platforms, with over 90 per cent of all transactions now taking place on alternative channels.
The bank recently launched a paperless end-to-end account opening process as part of the shift.
It also distributed Ksh42 billion in loans via its McoopCash wallet in the 2020 financial year. Of the figure, Ksh14.8 billion was distributed to micro, small and medium enterprises.
The company expressed a positive outlook for the future, noting that it had partnered with a global consulting firm to establish a proactive Credit Risk Management Project as part of its Covid-19 mitigation strategies.