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Excellent balancing act by Coop Bank in 2013 - myStocks Blog

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Excellent balancing act by Coop Bank in 2013

By Odhiambo Ramogi
Comments Saturday, March 22, 2014 a 8:50 AM EAT

Performance

Coop Bank reported a 17.9% rise in net profit for the year ended December 31 2013. The bank posted a profit of KES 9.1 billion up from KES 7.7 billion the previous year. The interest income grew by 0.8% to KES 24.5 billion while the non-interest income grew to KES 9.2 billion, a 13.4% increase from 8.2 billion the previous year.

The interest expense dropped to KES 5.6 billion down from 8.6 billion and the other operational expenses grew by 22.11% to KES 17.4 billion, testament of the expansion plan in South Sudan.

The bank announced a first and final dividend of 0.50 per share.

Coop Bank’s results are everything you want to see in a report;  significant growth in profits, increase in revenue, drop in expenses in spite of the expansion to South Sudan and a dividend announcement. Excellent balancing act portrayed by the banker.

 Risk Analysis

The cooperative bank is anchored upon the cooperative movement, with its clients and shareholders being the local cooperatives. This gives it a unique edge in the market and strength in numbers.

However, given its strong presence in the agricultural sector, the bank might be affected by international price fluctuations, weather patterns and overall agricultural production.

As the bank expands in the region, it will be exposed to trade and operational risks associated with underdeveloped markets like South Sudan. 

Market and Industry Dynamics

As of December 2012, the bank enjoyed a comfortable market share of 8.6%. The bank has continued to expand its market share, going deep to the bottom of the pyramid and positioning itself to capture a significant part of the corporate business. The bank remains popular among churches, NGOs, Cooperatives and schools.

Its neo-community strategy has worked and will continue to place it on a growth pedestal.

Growth Spectrum

Farmers know that not all cash cows need to be fed, some only need to stay alive, and they feed themselves, give milk and grow. Cooperative bank is one such cow. With a strong presence in the rural Kenya, bottom of the pyramid markets, community organisations and now making inroads into the corporate sector, the bank only need to stay alive and the investors will continue enjoying the milk.

However, the bank’s growth is highly dependent on the country’s economic growth and general investment in the agricultural sector. 

Labels: COOP

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