Kenyan tycoon Gideon Muriuki’s Co-op Bank eyes expansion after robust Q1 2024 performance

Co-operative Bank Group (Co-op Bank), a Nairobi-based lender led by Kenyan banking magnate Gideon Muriuki, is set to broaden its branch network following a robust financial performance in the first quarter (Q1) of 2024.

Co-op Bank expands branches, profits rise in Q1

The bank aims to open 15 new branches this year, reaching 210 outlets. Recent openings include Imaara Mall on Mombasa Road and Ugunja in Siaya. Additionally, subsidiary Kingdom Bank launched a branch in Gikomba, targeting micro, small and medium-sized enterprises (MSMEs). Co-op Bank also upgraded its core banking system to the latest Finacle version from Infosys for improved operational efficiency.

The Nairobi Securities Exchange-listed group’s net profit climbed to Ksh6.58 billion ($50.25 million) in Q1 2024, a 7.7 percent increase from Ksh6.11 billion ($46.66 million) in Q1 2023. This growth was driven by a rise in interest income, jumping from Ksh15.57 billion ($119.16 million) to Ksh19.41 billion ($148.54 million).

CEO attributes profit to cost control

CEO Muriuki credited the profit increase to higher total income and strict cost controls. Total operating income climbed 5.1 percent to Ksh18.8 billion ($143.53 million), while non-interest income remained stable at Ksh7.075 billion ($54.2 million). Net interest income rose 8.6 percent to Ksh11.7 billion ($89.33 million) from Ksh10.8 billion ($82.24 million). Operating expenses edged up marginally by 0.5 percent to Ksh9.86 billion ($75.28 million).

“The Co-operative Bank Group remains focused on resilience and growth across various economic sectors,” said Muriuki. Ahead of its virtual Annual General Meeting, Co-op Bank proposed a Ksh1.50 ($0.01) per share dividend payout, consistent with last year, totaling Ksh8.8 billion ($67.18 million). If approved, this will benefit shareholders, including Muriuki himself who owns a significant stake in the group.

In a strategic move to bolster small businesses, Co-op Bank allocated Ksh12.6 billion ($96.19 million) for affordable loans. The bank also secured a Ksh3.25 billion ($24.81 million) long-term credit agreement with global institutional investors led by German fund Deutsche Investitions (DEG). These funds aim to support women-led MSMEs, aligning with the bank’s commitment to the UN Sustainable Development Goals (SDGs).

Co-op Bank remains major player in East Africa’s financial sector

Co-op Bank remains a significant player in East Africa’s financial sector, with subsidiaries including Kingdom Securities, Co-Op Trust Investment Services, Co-Operative Consultancy & Insurance Agency, Kingdom Bank, and the Co-Operative Bank of South Sudan.

Co-Op Bank’s early release of earnings this week offers a positive outlook on the resilience of commercial banks in challenging economic conditions. As one of the first major lenders to report, the bank’s performance sets a potential benchmark for the industry.

Gideon Muriuki, a key figure in Co-Op Bank’s growth, holds a 1.75-percent stake in the leading lender. Valued at nearly $10 million, the stake solidifies his position among the top investors on the Nairobi Securities Exchange (NSE).