- Lender blames tough operating environment due to loan rate caps and problems in the South Sudan market.
- Co-op Bank’s net interest income from customer loans shrunk by 7.2 per cent to Sh7.7 billion.
- The top tier lender recorded a 15 per cent or Sh32 billion growth in its loan book to Sh245.9 billion during the quarter.
Co-operative Bank #ticker:COOP has recorded a six per cent drop in 2017 quarter one net profit, joining lenders that are counting the cost of reduced interest income on customer loans following rate caps.
The bank’s net profit for the quarter stood at Sh3.2 billion, compared to Sh3.4 billion in the first quarter of last year.
Co-op Bank’s net interest income from customer loans shrunk by 7.2 per cent to Sh7.7 billion, while interest earnings from government securities also fell by 17.8 per cent to Sh1.76 billion.
The lender attributed the fall in profit to a tough operating environment, citing the rate caps on customer loans and problems in the South Sudan market.
“It is a commendable performance against the backdrop of a tighter operating environment especially with the capping of interest rates and currency devaluation and hyperinflation on our operations in South Sudan,” said Cooperative Bank chief executive Gideon Muriuki in a statement.
"Co-operative Bank of South Sudan…made a loss of Sh34.7 million in the period under review owing to hyperinflation occasioned by devaluation of the South Sudanese currency.”
Total non-interest income also retreated in the period under review, to Sh3.39 billion compared to Sh3.46 billion in quarter one 2016.
The lender was, however, able to cut its interest expenses by 28 per cent to Sh2.8 billion, cushioning itself against fall in income.