Co-op Bank raises dividend payouts on full year earnings
The Co-operative Bank Moi Avenue branch in Nairobi, Kenya. The bank has increased its dividend pay-out to shareholders by 50 percent. PHOTO | DENNIS ONSONGO | NMG
It has led to a sustainable increase in shareholder value as reflected in the competitive return on equity (ROE) of 21.2 percent.
The bank’s South Sudanese subsidiary profited $1.02 million compared to a loss of $3.26 million in 2021.
The Subsidiary based in Juba commenced operations in September 2013.
Kenya’s Co-operative Bank has increased its dividend pay-out to shareholders by 50 percent after its net earnings for the year ended December 31, 2022 surged by more than 30 percent, reflecting highest payment in 15 years.
The lender’s profit after tax grew by 33 percent to KSh22 billion ($169.36 million) from KSh16.5 billion ($127 million) in 2021 buoyed by an increase in both interest and non-interest income, a turnaround of its subsidiary in South Sudan.
As a result, the board has proposed a dividend payout of KSh1.5 ($0.012) per share from the previous year’s KSh1 ($0.0077) per share, subject to both regulatory and shareholder approvals.
The latest dividend payout translates to a total of KSh8.8 billion ($67.74 million), the highest dividend since the lender’s listing at the Nairobi Securities Exchange in 2008.
Nairobi Securities Exchange on the trading floor at the Exchange building in Nairobi on August 26, 2020. PHOTO | NMG
“The strong performance has led to a sustainable increase in shareholder value as reflected in the competitive return on equity (ROE) of 21.2 percent,” said Gideon Muriuki, the group’s chief executive.
Income growth witnessed
According to the group’s audited financial statements released Thursday, total operating income grew by 17.9 percent to KSh71.3 billion ($548.87 million) from KSh60.4 billion ($464.96 million) while total operating expenses increased by 10.9 percent to KSh42.2 billion ($324.86 million) from KSh38.1 billion ($293.29 million) in the same period.
Net interest income grew by 10.9 percent to KSh45.5 billion ($350.26 million) from KSh41 billion ($315.62 million) while total non-interest income grew by 32.7 percent to KSh25.7 billion ($197.84 million) from KSh19.4 billion ($149.34 million).
Subsidiary profits
The lender’s subsidiary in South Sudan returned a profit of KSh132.7 million ($1.02 million) compared to a loss of KSh421.7 million ($3.25 million) in the previous year.
Last year (2022) Co-op Bank pumped an additional capital of KSh372 million ($2.86 million) in its subsidiary in South Sudan as part of effort to save an investment that has accumulated losses of KSh3.29 billion ($25.3 million) in eight years of operation.
Kenyans walk past Co-operative Bank branch on Kenyatta Avenue, Nairobi. PHOTO | DENNIS ONSONGO | NMG
In 2013, Co-op bank, which is 64.6 percent owned by co-operative societies, invested KSh2.27 billion ($17.47 million) for a 51 percent stake in its South Sudan subsidiary with the remaining 49 percent held by the Government of South Sudan through a joint venture agreement.
Based in Juba South Sudan, it commenced operations in September 2013 and currently runs four branches.
In 2021, Co-op Bank extended this joint venture by three years, arguing the transfer of the minority stake to the South Sudanese Co-operative movement has been delayed by economic and political challenges in the country.
