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"Freedom for Everybody or Freedom for Nobody"
Malcolm X

Wednesday 27 April 2011

Analysing The Co-operative Bank Of Kenya 1st Quarter 2011 Results



The Co-operative Bank of Kenya (from now “The Bank”) has released its results for the First Quarter 2011 period.
Profit Before Tax increased by 57.4% from 1.3 billion to 2.04 billion. Profit After Tax increased by 57.7% from 1.04 billion to 1.64 billion

Total assets increased by 39.18 percent to 169.45 billion.
Customer deposits increased 35.89 percent from 100 billion to 135.954 billion.
This is a statement from The Bank that we can expect increased lending from them as they have an increasing deposit base which they can rely on.

Interest from loans and advances was up 34.18 percent to 2.9 billion
Not surprisingly, interest income from Government banks was flat. They managed 530 million from govt. securities in 1st Quarter 2011 as opposed to the 531 million they got in 1st Quarter 2010. This was a very marginal 0.19 percent drop. This phenomenon is highly expected to repeat itself across the industry. Banking enthusiasts will have their eyes firmly fixed on Diamond Trust Bank another listed bank as they made a huge amount off Government Securities for the full year 2010.

Net Interest Income was up 46.4 percent
The bank leveraged on the huge cooperative movement to record an increase of 45 percent in Other Fees and Commissions. The huge numbers in the cooperative movement assures the bank of a streaming flow of income from fees and charges they levy on their customers from services such as withdrawals. Total operating income was thus up 41.1%

Management will however have to keep staff costs in check which went up by almost 27%. The Agency Banking model will ensure banks significantly cut costs.
Total Other Operating Expenses was up 30.22% to 2.536 billion.

Net non performing loans reduced by 54.5 percent from 1.98 billion to 1.28 billion, a sign that the bank has a much cleaner book.

Earnings Per Share (EPS) was up to 0.47 from 0.3, giving it a forward Price to Earnings Ratio (P/E Ratio) of 1.88.

The share has responded positively. As at 1.09 p.m the share price was at 18.40 giving it a forward P/E of 9.88. Demand for the stock was very high and supply thin.

Cooperative Bank is the first listed bank to release results. Other banks are soon expected to follow. The Bank's performance is expected to mirror the industry's performance, though those with significant bond portfolios in their books are expected to slightly dented.

In my last post NSE DOWN FOR 1ST QUARTER 2011, I had indicated that banks would release very good results for the 1st quarter. I expect Equity Bank and Kenya Commercial Bank to post similarly, if not more brilliant results.










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