By Stanley Wabomba
The Co-operative Bank of Kenya has secured a long-term financing facility with the International Finance Corporation (IFC) amounting to USD 105 million (Kshs10.7 Billion).
The long-term loan has a tenure of 7 years, and is the second that the bank has sourced from IFC, having taken a USD60 million loan in the fourth quarter of 2013.
The Co-operative Bank will apply the proceeds to of the facility mainly to finance export-oriented enterprises and other institutions who need financing support in foreign exchange.
The facility is intended to support customers of the bank who have foreign exchange earnings and operating in Small Medium Enterprises (SMEs), Women-0wned Small and Medium Enterprises (WOEs) and affordable Housing through expansion of mortgages and construction finance.
Commenting upon the signing of the loan agreement, Co-operative Bank Group Managing Director and CEO Dr. Gideon Muriuki said, “The funding comes at a most appropriate time in view of the critical need to support the growth of exports in the economy. In addition, the long-term tenure of the facility significantly boosts the bank’s ability to offer financing solutions that are better structured and priced to fulfill the long-term financing needs of customers.”
The Co-operative Bank has leveraged its strong balance sheet with total assets at over Kshs332 Billion (as at 30th September 2015) and the loan will substantially enhance the bank’s opportunities for growth and overall performance.
The bank has been on a growth trajectory reporting a Profit before Tax of Kshs.12.16 billion for Quarter 3 2015 an impressive +33%compared to corresponding period in 2014.
The new loan will enable the bank to grow its loan book significantly having already grown net loans and advances book by Kshs. 36.39Billion (21%) as at 30th September 2015fromKshs. 212.36 billion compared to Kshs. 175.97 Billion in the same period in 2014.
Also diversify the funding portfolio by increasing long term funding to Kshs26 billion to support deposits funding which grew to Kshs. 257.46 billion as at 30th September 2015 from Kshs. 206.64 billion last year, a 25% increase.
The landmark IFC facility will thus enhance the commendable performance that the bank has achieved following the successful implementation of the ‘Soaring Eagle’ transformation project that the Bank has been driving with a critical focus on cost optimization, improvement in operating efficiencies and innovative customer delivery platforms.
Meanwhile, the Board of Directors of the Co-operative Bank have announced a new annual intake of 655 bright but needy students across the country to join the Co-op Foundation Scholarship Scheme in 2016.
Of the 655 new scholarships to the incoming Form One students, 420 will be awarded by the bank’s Regional Delegates’ Forums and the remaining 235 scholarships, at 5 per county, will be awarded by the County Governments in all the 47 counties, the bank’s Group Managing Director and CEO Dr. Gideon Muriuki has said.
Additionally, the bank will be educating a total of 130 students, selected from the top performing beneficiaries of the secondary school scholarships, through their entire university education.
The scholarships are awarded on merit to promising but needy students from all regions of Kenya.
Commenting further on this program, Dr. Gideon Muriuki said, “Our scholarship beneficiaries are selected at the grassroots level by Co-operative Societies across the country through a well-established national delegates system. Co-operative Societies, who are the face of Kenya, identify well-performing students from disadvantaged backgrounds and bring these names into a regional forum where delegates debate and select the most deserving cases. At the banks’ head office, our role is to process payments to the schools and monitor the students’ performance through the four years in secondary school. The top 28 in the Form Four examination each year are granted an additional full scholarship for their university education,” Dr. Muriuki added.
Commenting on the reason why the bank has chosen education scholarships as its flagship Corporate Social Investment, Dr. Gideon Muriuki observed that education is one of the most expensive items in any household budget and yet has the highest potential to liberate people from poverty.
“Unless corporate institutions and all people of goodwill come together to support initiatives within the education sector, brilliant but needy Kenyans will never realise their full potential. Being poor does not mean that one isn’t bright or has no potential. A large number of Kenyans holding positions of responsibility today were educated with loans from the Co-operative Movement. It is for this reason that the Co-operative Bank, being the premier co-operative institution in Kenya, has taken the lead in this area.”