Layoffs and Tax Review Eat Into Co-Op’s Profits

COOPERATIVE Bank of Kenya’s net profit for 2014 dropped by 12 per cent weighed down by a one-off staff retrenchment bill and higher tax.

Coop announced yesterday that profit after tax stood at Sh8.01 billion compared to Sh9.1 billion in 2013. The bank started paying a 30 per cent tax rate in the last financial year after the expiry of a five-year concessional tax rate it was granted upon listing at the Nairobi Securities Exchange in 2008.

The bank made a pretax profit of Sh12.3 billion, a growth of 12.8 per cent compared to 10.87 billion made in 2013. It graduated to a 30 per cent tax from 20 per cent and retrenched 160 senior managers at a cost of Sh1.34 billion.

Managing director Gideon Muriuki attributed the improved revenues by the bank to a 31 per cent growth in its loan book, higher interest income and a 17 per cent rise in non-funded income.

“We have grown our capital and strengthened our asset base and we can now lend a maximum of Sh10 billion per single customer, the corporates,” Muriuki said at an investor briefing held yesterday.

Muriuki said 23 out of total 142 branches made a loss of Sh300 million. The 23 which include South Sudan were all new, opened within the year and are expected to break even and contribute to profit in 2015, he said.

The bank’s asset value rose to Sh285.4 billion from Sh231 billion while net loans and advances grew by 31 per cent to Sh179.5 billion compared to Sh137 billion in 2013.

Deposits were higher by 22 per cent to Sh221 billion from Sh180.9 billion while non funded income was boosted by increase in fees and commissions among others to stand at Sh10.8 billion, 17 per cent more than Sh9.3 billion recorded previously.