The Co-operative Bank of Kenya on Friday issued a profit warning for its full year financial results, saying earnings were being hit loan loss provisions and losses from its South Sudan operations.
“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.
“As expected, loan loss provisions have been much higher than in the previous year in appreciation of the challenges that the businesses and households continue to grapple with in meeting their obligations to the bank. In addition, Co-op Bank has absorbed currency translation losses in our South Sudan operations due to the hyper-inflation that continues to ravage that country,” Co-op said to its shareholders.
Coop bank’s total non-performing loans in the third quarter expanded to KSh34.2 billion from KSh24.8 billion, a 37.8% increase.
“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,’’ Managing Director Gideon Muriuki said.
The bank’s asset quality deteriorated, with the NPL ratio coming in at 13.2% in Q3’2020, from 10.5% in Q3’2019, owing to slower growth in gross loans by 6.6% compared to the 33.6% growth in gross non-performing loans.
In FY 2019, the lender’s gross profits rose to KSh20.7 billion up from KSh18.2 billion in 2018 as it deepened the financial inclusion model rooted in over 15 million members of the cooperative movement in the country.