The Co-operative Bank of Kenya has become the sixth lender to issue a profit warning on expected 2021 earnings.
In a notice to shareholders on Friday, the bank attributed the expected collapse in earnings to economic disruptions arising from the COVID-19 pandemic.
The volatile operating environment has seen the lender raise its loan-loss coverage in the past twelve months shrinking its bottom-line in the process.
“As expected, loan loss provisions have been much higher than in the previous year in appreciation of the challenges that businesses and households continue to grapple with in meeting their obligations to the bank,” the lender said.
“In addition, Co-op Bank has absorbed currency translation losses in our South Sudan operation due to the hyper-inflation that continues to ravage the country.”
Co-op’s earnings through the first nine months of 2020 slumped by 11.1 per cent to Ksh.9.8 billion as the banks loan-loss provisioning costs nearly doubled to Ksh.4 billion from Ksh.2.1 billion in 2019.
At the same time, the lender’s stock of gross non-performing loans (NPLs) hit Ksh.40.2 billion in the period from Ksh.30.1 billion.