Co-operative Bank of Kenya has posted a 5.2 percent growth in net profit to Sh23.2 billion in the financial year ended December 2023 on increased income and reduced operating costs.

The net profit grew from Sh22 billion posted in a similar period last year. The board has, on the back of the increased profit, recommended a dividend of Sh1.5 per share, amounting to Sh8.8 billion, matching that of the previous year.

The dividend will be paid after the approval by shareholders in the virtual annual general meeting slated for May 17, 2024. The top shareholder, Co-op Holdings Co-operative Society Limited, will receive Sh5.68 billion on its 64.56 percent stake.

“The strong performance has led to a sustained increase in shareholder value as reflected in the competitive return on equity of 21 percent,” said Gideon Muriuki, the managing director at Co-op Bank.

“The Co-operative Bank Group continues to pursue strategic initiatives that focus on resilience and growth in the various economic sectors.”

Net interest income in the review period was flat at Sh45.23 billion compared with Sh45.52 billion posted in the preceding similar period. However, non-interest income grew three percent to Sh26.46 billion taking operating income to Sh71.69 billion from Sh71.25 billion.

Co-op Bank cut its operating expenses by six percent to Sh39.67 billion from Sh42.24 billion on reduced provisioning for loan losses and a drop in other operating expenses.

The provision for loan defaults fell 30.8 percent to Sh6 billion, while other operating expenses reduced by 16 percent to Sh12.2 billion, more than absorbing the rise in staff costs.

Co-op’s staff costs increased to Sh16.69 billion from Sh14.78 billion on salary increase as well as the hiring of 536 new employees. The expanded workforce came in the period Co-op increased its branch network by eight to hit 194. The lender is planning to close 2024 with an additional 15 branches.

“The bank continues to invest in a competitive team set to serve at existing functions and at the same time tap new growth opportunities across all areas of the business,” said Mr Muriuki.