In the first quarter of 2024, Cooperative Bank loaned an impressive Sh200 million every day through digital channels, boosting the group’s net earnings to Sh6.6 billion. The bank’s mobile-based platform, launched in late 2020, offers a range of services including small loans, account opening, utility payments, funds transfer, airtime top-ups, and cash withdrawals via mobile phones.
Mobile Banking’s Role in Non-Funded Income Growth
According to the Q1 2024 results, the MCo-op Cash Mobile wallet played a crucial role in driving substantial non-funded income streams. The bank disbursed Sh18.1 billion in loans in the first three months of the year, averaging Sh6 billion per month. Co-op Bank Group Managing Director, Gedion Muriuki, stated, “The platform interfaces online banking through personal computers, mobile phones, and USSD, availing our services to all customers.”
Growth in Loans and Advances
The rise in digital transactions contributed to the bank’s net loans and advances, which grew to Sh378.1 billion, marking a 5% increase from Sh360.1 billion during the same period last year. As a result, the lender’s gross earnings climbed by 10.6%, from Sh8.15 billion to Sh9.01 billion.
Increased Deposits and Sacco Dividends
Co-op Bank also experienced significant growth in deposits, which increased by 14.8% to Sh481.8 billion from Sh419.8 billion in 2023. This growth was partly driven by improved Sacco dividends earned by the bank’s customers, who form a significant portion of Kenya’s 15 million-strong Cooperatives and Sacco movement. According to data from the State Department of Cooperatives, total savings grew by 15.6% last year, reaching Sh1.047 trillion.
Expanding Asset Base
Thanks to this growth in deposits, Co-op Bank cemented its position as one of the country’s largest lenders in terms of assets, behind only KCB Group and Equity Bank Group. The bank’s total assets grew by 13.2% to Sh714.7 billion from Sh631.1 billion in 2023.
Operating Income and Efficiency Improvements
During the first quarter, total operating income rose by 5.1%, from Sh17.9 billion to Sh18.8 billion. Net interest income grew by 8.6%, increasing from Sh10.8 billion to Sh11.7 billion. Although total non-interest income remained stable at Sh7.1 billion, the group’s operational efficiency improved, reducing its Cost-to-Income Ratio to 44.1%, a significant improvement from 59% in 2014 when the bank began its efficiency journey.
Subsidiary Performance
Co-op Bank’s subsidiaries showed strong growth during this period. The Co-operative Bank of South Sudan reported a remarkable turnaround with gross earnings rising by 49% to Sh128.5 billion, recovering from a loss of Sh71.4 million in 2023.
Kingdom Bank, the group’s MSME lending subsidiary, contributed Sh350.3 million in gross profit, a 33.9% increase from Sh261.5 million in Q1 2023. Additionally, Co-op Bancassurance Intermediary posted profits of Sh305 million, while Co-op Trust Investment Services contributed Sh75.5 million, up from Sh51.2 million during the same period last year.
In summary, Co-op Bank’s strategic focus on digital loans and mobile banking has been a major factor in its sustained growth and profitability, further supported by increased deposits, asset expansion, and strong subsidiary performance.
