Kenyan Listed Banking Sector Quarterly Earnings and Operating Metrics

- Co-operative Bank Summary of Performance – Q3'2022 . • The bank registered a 47.0% increase in profit after tax to Kshs 17.1 bn in Q3'2022, from Kshs 11.6 bn in Q3'2021, driven by a 17.6% increase in total operating income to Kshs 52.2 bn in Q3'2022, from Kshs 44.4 bn in Q3'2021, which outpaced the 6.0% increase in the total operating expenses to Kshs 29.6 bn in Q3'2022, from Kshs 28.0 bn in Q3'2021, Total operating income rose by 17.6% to Kshs 52.2 bn in Q3'2022, from Kshs 44.4 bn in Q3'2021 mainly driven by an 11.7% increase in Net Interest Income coupled with a 28.3% growth in Non-Funded Income (NFI), Total operating expenses increased by 6.0% to Kshs 29.6 bn in Q3'2022, from Kshs 28.0 bn in Q3'2021, largely driven by an 8.1% increase in staff costs to Kshs 10.8 bn, from Kshs 10.0 bn in Q3'2021 coupled with a 9.9% increase in other operating expenses to Kshs 13.1 bn, from Kshs 11.9 bn in Q3'2021. The increase in total operating expenses was mitigated by a 5.3% decline in Loan Loss Provisions (LLP) to Kshs 5.7 bn, from Kshs 6.0 bn in Q3'2021, The balance sheet recorded an expansion as total assets grew by 4.9% to Kshs 622.1 bn in Q3'2022, from Kshs 592.9 bn in Q3'2021, The group's asset quality improved, with the NPL ratio reducing to 14.0% in Q3'2022, from 14.6% in Q3'2021, owing to the 9.5% growth in gross loans to Kshs 371.1 bn, from Kshs 338.7 bn in Q3'2021, which outpaced the 4.7% increase in gross non-performing loans. The improved asset quality was attributable to the continued economic recovery which has seen more business pick up and more people going back to their jobs given that the group's loan book constituted 50.5% personal consumer loans as of H1'2022 Going forward, we expect the bank's growth to be driven by: Focus on diversification: The bank's continued concentration on channel diversification will likely see it continue generating more profit, as they will continue to record increased usage and traffic. As of Q2'2022, 94.0% of the transactions were done on the alternative channels such as mobile and in Cytonn Non-Funded Income by 28.3% to Kshs 20.2 bn in Q3'2022, from Kshs 15.7 bn in Q3'2021 50

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