How Saccos will share Sh3.8bn dividend cheque from Co-op Bank

BySacco Review

Apr 7, 2022

By Sammy Chivanga

Savings and Credit Co-operative Societies (Saccos) are expected to emerge the biggest winners as Co-op Bank of Kenya Board recommended a Sh1 per share dividend amounting to Sh.5.86 billion, where Saccos are in line to receive Sh.3.79 billion from the amount.

With this year’s dividend payment, Kenyan co-operatives through Co-op Holdings will have earned Sh25.3 billion in dividend payments from Co-op Bank in the last seven years.

Harambee Sacco, with the highest stake (3.83 percent) in Co-op Holdings will receive Sh.145.16 million from Co-op Bank followed by H&M Cooperative with Sh.125.45 million for its 3.31 percent stake.

Kenya Police Sacco will get Sh.120.14 million for holding 3.17 percent stake while Afya Sacco and Masaku Teachers Coop Savings will get Sh.111.43 million and Sh.110.29 million for 2.94 percent and 2.91 percent stakes respectively.

Completing top 10 highest beneficiaries from Co-op dividend cheque will be Kipsigis Teachers Coop Savings (Sh.101.57 million), Cooperative Bank Coop Savings (Sh.96.27 million), K-Unity Savings and Credit (Sh.90.2 million), Telepost Cooperative (Sh.86.41 million) and Nawiri Sacco (Sh.69.36 million).

The pay-out, set for mid-June, is the same as the payment for 2020 results that is offering the cooperative movement the much needed shot in the arm.

“The Board of Directors of Co-op Bank made the bold decision to sustain the same level of dividend to shareholders – even during the Covid-19 crisis when many other banks and listed companies decided to withhold dividends,” said Gideon Muriuki, CEO at Co-op Bank.

“This is informed by the awareness that the dividend offered a most critical lifeline especially to the over 15 million-member co-operative movement, whose livelihoods would have been severely impaired had the dividend been withheld,” remarked the CEO.

Co-op Bank was listed at the Nairobi Securities Exchange in December 2008, and shares previously held by 3,805 Co-operatives societies and Unions were ring-fenced under Co-op Holdings Co-operative Society Limited.

Co-op Holdings has 3,799 individual co-operative society shareholders with a well-established over-the-counter trading of shares held by them. Trading of these shares is only open to registered co-operative societies.

Co-op’s consistent dividend payout has enabled Co-op Holdings to recoup and exceed their entire initial investment in the bank.

The top 10 Co-op Holdings shareholders account for 27.87 percent stake and payment, leaving the rest to share Sh.1.39 billion.

The dividend payout offers more relief for cooperatives as they continue to turn tables on Covid-19 economic disruptions.

Saccos whose earnings had been hurt by the pandemic, especially those that draw majority of their members from the private sector, will use the money to boost their liquidity and support members through loans and dividends.

Co-operative Bank of Kenya posted a 53 percent rise in net profit for the financial year ending December 2021 to Sh.16.5 billion, helped by increased income and reduced expenses.

The net profit is the best performance ever by the bank, and is in line with the group’s strategic focus on sustainable growth and transformation, according to Muriuki.

The earnings raced past the pre-pandemic profit of Sh.14.3 billion in 2019, signaling that the lender has joined its peers in overcoming the disruptive virus.

In addition, the controlling 64.56 per cent equity stake is currently worth over Sh.50 billion even at the current depressed stock market prices, which makes Co-op Holdings a major asset-holding Sacco.

Co-op Bank also enjoys a significant lending exposure to its strategic market segment – the Saccos.

The consistent trend in dividend pay-out by Co-op Bank has enabled cooperatives to recoup and exceed their entire initial investment in the bank.

Co-op went public in 2008 at an offer price of Sh.9.5, equivalent to an aggregate value of Sh.33.2 billion.

The lender has been deepening ties with the cooperatives movement and runs a dedicated business division to support co-operatives.

Co-op also runs a wholly-owned subsidiary, Co-op Consultancy Services, with full time consultants for offering capacity-building and institutional development advice to co-operatives.

Co-op Consultancy Services has executed over 900 mandates in the last five years, helping co-operative clients to adopt viable operating models and become competitive in the market.

Co-op Bank branches countrywide offer cash management and related support to FOSAs operated by Saccos.

The bank invested in the Sacco Link platform that integrates Sacco systems to the bank, which has enabled Saccos to issue over 1.5 million Visa-branded debit cards to members.

The platform helps Saccos retain liquidity while at the same time helping members with the debit cards to access funds in their FOSA accounts from any Visa-branded outlet.

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