Co-operative Bank of Kenya’s net profit grew 5.8 percent in the half year ended June to Sh12.1 billion as interest expenses expanded faster compared to income from lending and non-lending sources.

The bank had posted a net income of Sh11.4 billion a year earlier. Total interest income increased 11.9 percent to Sh31.9 billion, helped by the loan book expanding by 10.7 percent to Sh365.3 billion.

The bank’s investment in government debt securities also increased from Sh183.1 billion to Sh188.4 billion, contributing to the interest income pool.

Co-op Bank’s chief executive Gideon Muriuki said the performance fits with the lender’s strategy of pursuing sustainable growth.

“The strong performance by the bank is in line with the group’s strategic focus on sustainable growth, resilience, and agility,” Mr Muriuki said in a statement on Thursday.

“The group continues to pursue strategic initiatives that focus on resilience and growth in the various economic sectors.”

Co-op Bank’s non-interest income rose 3.9 percent to Sh13.8 billion, partly aided by transactions on its mass-market mobile wallet MCo-op Cash.

The platform had five million customers registered and Sh41.3 billion in loans disbursed in the review period, amounting to an average of Sh6.9 billion per month.

Interest expenses surged 38.9 percent to Sh10.4 billion amid growth in customer deposits in an environment of rising interest rates on various assets including fixed deposits.

The bank’s customer deposits increased by Sh40.8 billion to Sh463.8 billion, bolstering its funding sources.

Kingdom Bank, in which Co-op Bank has a 90 percent stake, saw its net profit rise 28.6 percent to Sh521.9 million.

Co-op Bank acquired the lender, previously mired in heavy losses, in 2020 via a Sh1 billion rescue deal arranged by the Central Bank of Kenya.