Co-operative Bank of Kenya ,net profit retreated to Sh3.46 billion in the first quarter of trading despite growth in interest income as the lender increased provisioning for loan defaults in a pandemic environment.
The net earnings for the three months to March 2021 were 3.6 per cent lower than the Sh3.59 billion posted in a similar period last year.
Net interest income—which is income from the mainstay business of lending—grew by 31 per cent to Sh9.8 billion as the bank expanded its loan book.
However, the lender raised provisioning for loan defaults 2.5 times to Sh2.3 billion to reflect the difficulties facing businesses and individuals in servicing loans in the Covid-19 environment.
The increased provisioning for loan defaults saw total operating expenses rise by 27 per cent to Sh9.3 billion, weighing down the bottom-line.
“The Group prudentially increased loan loss provisions to Sh2.3 billion in the first quarter of the year in appreciation of the challenges that businesses and households continue to face due to the economic effects of the ongoing pandemic,” said Gideon Muriuki, the chief executive.