Co-op Bank Issues KES 1.00 interim Dividend as Profits Soar 12.3%
Co-operative Bank Group plc reported KES 30.03Bn profits before tax (PBT) for the three quarters ending 30th September 2025, reflecting a 12.1% year on year (y-y) rise in comparison to KES 26.78Bn reported same period in 2024. The strong performance was occasioned by improved lending and a lower cost of financing the Bank’s asset books. The sustained interest rate cuts saw the overall core business contribution to total income expand further from 62.3% in Q3-2024 to 67.2% by end of Q3-2025, signaling an improved cost of financing for the bank and the cost of borrowing for businesses and individuals.
Quarter on quarter (Q-Q), the Lender’s PBT rose 3.3% as PAT went up 4.7%.
The Group’s subsidiaries recorded a stellar growth of KES 33.0% in PBT from KES 2.31Bn to KES 3.07Bn, to raise their contribution to Group PBT from 8.6% to 10.2%. The Group’s non-banking units performed better with a 64.2% rise in PBT to KES 2.32Bn, led by Co-op Bancassurance Intermediary which reported KES 1.15Bn PBT. Kingdom Bank came second with KES 820.20 million PBT.
Co-op Bank Kenya recorded a 10.1% growth in PBT from KES 17.55Bn to KES 18.33Bn with faster growths happening in Q3-2025 demonstrating the impact of the rate cuts.
Group profits after tax (PAT) jumped 12.3% y-y from KES 19.21Bn in Q3-2024 to KES 21.57Bn to solidify its conservative growth model. This resulted to an 11.9% rise in earnings per share (EPS) to 3.68 annualized to 4.91 for a price to book (P/B) ratio of 0.89x and price to earnings ratio of 5.07x. We issue a SELL recommendation on the Group’s share with a revised implied value of KES 25.18 per share, a 1.1% upside from the current price of KES 24.90 as of 13th November 2025.
The Group’s Board recommended a KES 1.00 interim dividend whose book closure and payments dates are 26th November and 4th December, respectively.
Income Statement
Net Interest income (NII) surged 22.8% y-y from KES 36.87Bn to KES 45.28Bn supported by improved interest incomes and contractions in the cost financing loans & advances to benefit from monetary policy actions.
Total interest income jumped 10.0% up to KES 67.92Bn to benefit from the expanding securities book and loans & advances. The government securities book attracted a 20.3% growth to KES 256.67Bn as loans and advances went up 6.7% to KES 406.52Bn. The rise in loan book emanated from increased disbursements after the downward rate reviews from 12.75% in Q3-2024 to 9.50% in Q3-2025.
This further benefitted from the new risk-based pricing model for new variable loans which took effect on 1st September 2025.
Interest income from loans and advances rose 7.2% y-y from KES 39.41Bn to KES 42.23Bn to reap from the above rate cuts which improved credit scores while also making credit affordable for both businesses and individuals.
Rising lending volumes saw yield on advances expand from 13.9% in Q3-2025 to 14.4% by end of Q3-2025.
Interest income from government securities rose faster at 12.4% from KES 19.76Bn to KES 22.22Bn as the Bank went aggressive in securities investing, which saw an addition KES 43.26Bn added to the sector.
Yields on government securities however, slowed down from 13.0% to 12.5% as rate cuts transmission on government securities moved in faster compared to loans.
Interest expense contracted 9.0% y-y from KES 24.89Bn to KES 22.65Bn as the lender passed on the rate cuts to its customer deposits to gain from rate reviews. As such, cost on customer deposits dropped 9.9% from KES 21.42Bn to KES 19.30Bn.
Operating expenses soared 15.4% from KES 32.68Bn to KES 37.72Bn largely eroded by loan loss provisions and staff costs. Loan loss provisions escalated 31.9% up from KES 5.58Bn to KES 7.36Bn.
Excluding loan loss provisions, operating expenses were up 12.0% from KES 27.10Bn to KES 30.36Bn.
Staff costs expanded 11.5% from KES 13.50Bn to KES 15.05Bn elevated by normal salary increments for inflation review of July and other staff bonuses.
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Balance Sheet
The Group’s total assets rose 8.6% or by an additional KES 64.49Bn from KES 750.78Bn to KES 815.27Bn largely supported by upticks in government securities book and loan book.
Government securities book attracted KES 43.26Bn from KES 213.40Bn to KES 256.67Bn as the Group went aggressive in investing in securities.
Low lending rates saw total loan book expand 6.6% from KES 381.34Bn to KES 406.52Bn.
Customer deposits rose 6.7% from KES 513.98Bn to KES 548.59Bn to support the growing loan book. To further support the growing asset bases, the bank’s borrowings rose 14.6% from KES 58.02Bn to KES 66.51Bn.
Shareholders’ funds accelerated 24.5% from KES 131.83Bn to KES 164.52Bn supported by a 9.4% rise in retained earnings which continue to gain from the rising profits.
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Key Ratios
Reduced lending rates saw the Bank’s cost of funds narrow down from 6.0% to 5.1% year on year to push the net interest margins upwards from 7.2% in Q3-2024 to 8.2% in Q3-2025.
The rise in loan loss provisions saw the overall cost of risk escalate from 2.0% to 2.5%. Non-performing loans (NPLs) rose from 14.8% in Q3-2024 to 15.6% in Q3-2025, against an industry ration of 17.1% as of September 2025.
Return on average equity (ROaE) slowed down from 21.0% in Q3-2024 to 18.5% in Q3-2025 held down by a faster growth in shareholders funds in relation to the overall net income. Slow growth in total assets however, saw the return on average assets (RoaA) improve marginally from 3.6% to 3.7% supported by a faster rise in profits.
