Co-operative Bank of Kenya has been ranked at position two as the most attractive bank in the country after I&M Holdings.
According to the latest banking Q1 2020 report by Cytonn Investment themed “Deteriorating Asset Quality amid the COVID-19 Operating Environment”, said Co-op has continued implementation of “Soaring Eagle” transformation initiatives is expected to drive growth and increase efficiency.
“Co-operative Bank of Kenya Ltd whose rank improved to Position 2 from Position 3 in FY’2019 mainly due to an improvement in the Gross NPL ratio to 10.8% in Q1’2020 from 11.2% in FY’2019, in turn, improving its franchise value score,” Cytonn said.
Kenya’s banking sector showed resilient performance despite the tough operating environment which was largely attributable to persistent revenue diversification.
“Asset quality deteriorated in Q1’2020 with the gross NPL ratio increasing by 0.9% points to 11.3% from 10.4% in Q1’2019. This was high compared to the 5-year average of 8.5%. In accordance with IFRS 9, banks are expected to provide both for the incurred and expected credit losses. Consequently, this saw the NPL coverage increase to 57.4% in Q1’2020 from 54.5% in Q1’2019 as banks adopted a cautious stance on the back of the expected impact of the COVID-19 pandemic,” the Cytonn Report.