Co-op Bank and I&M Lead Top Performing Banks in Kenya 2020 - Cytonn

  • A photo of Co-operative Bank CEO Gideon Muriuki giving an address.
    Co-operative Bank CEO Gideon Muriuki giving an address.
    Business Daily
  • I&M Bank and Co-operative Bank have secured the top two spots as Kenya's leading financial institutions, according to a report by Cytonn Investments.

    The report shows I&M Bank came in first place in a ranking of the country's leading lenders, followed by Co-operative Bank.

    Co-op Bank's ranking rose to second from third in the 2019 Financial Year (FY) with the improvement attributed to the Gross non-performing Loans (NPL) ratio to 10.8 percent in Q1’2020 from 11.2% in FY’2019, in turn, improving its franchise value score.

    "Co-operative Bank emerged top in the franchise ranking due to high-efficiency levels as evidenced by a low Cost to Income ratio which came in at 58.1 percent vs an industry average of 61.4 percent," the report revealed.

    At the same time, KCB group which was ranked first in 2019, declined to third place mainly due to a deterioration in the cost to income ratio to 61.1% in Q1’2020 from 56.2 percent in 2019 thus, in turn, worsening the franchise value score. 

    Equity Group and Diamond Trust Bank emerged fourth and fifth respectively in the comprehensive ranking.

    The report observed that Kenya’s banking sector had shown resilient performance despite the tough operating environment which was largely attributable to persistent revenue diversification.

    While releasing the financial results for Quarter 1,2020, Co-op Bank announced that it had restructured loans worth Ksh15 billion in the first quarter of 2020 to support customers during the Covid-19 pandemic.

    With many sources of income affected by the pandemic, the bank engaged customers seeking a longer repayment period, those in need of an interest moratorium period and those seeking additional funding to sustain operations during the pandemic.

    For Quarter 1, 2020, the bank recorded a profit before tax of Ksh5.1 billion. Profit after tax was Ksh3.6 billion.

    In a statement, the bank acknowledged the impact of the pandemic on its operations, disclosing that it had prompted an accelerated shift towards digital channels.

    "The group has put in place a comprehensive mitigation strategy intended to ensure full banking services continue being accessible to customers in a safe environment consistent with the Ministry of Health guidelines.

    "In this regard, we continue to leverage our digital channels while ensuring that all branch outlets remain open to offer service, with due regard to the health and safety of both customers and bank teams," it read in part.

    Co-operative Bank Branch Along Kenyatta Avenue in Nairobi. Monday, October 21, 2019.
    Co-operative Bank Branch Along Kenyatta Avenue in Nairobi. Monday, October 21, 2019.
    Simon Kiragu