Co-operative Bank of Kenya has maintained its dividend payout at Sh1.5 per share after posting a 9.8 percent jump in net profit for the year ended December.
The lender made a net profit of Sh25.4 billion in the period under review, up from Sh23.1 billion a year earlier, boosted by higher interest income.
The dividend, totalling Sh8.8 billion, will be paid on June 10 to shareholders on record as of April 28.
Top shareholder Co-op Holdings Co-operative Society Limited will receive Sh5.68 billion for its 64.56 per cent stake. Co-op Holdings Co-operative is owned by Saccos including Harambee, Kenya Police, Afya and Kipsigis Teachers.
“The strong performance has led to a sustained increase in shareholder value as reflected in the competitive return on equity of 19.7 percent,” Co-op Bank’s managing director Gideon Muriuki said.
Net interest income grew by 13.9 percent to Sh51.52 billion from Sh45.23 billion, driven by higher lending margins as well as increased investment in government securities whose returns rose significantly last year.
Non-interest income grew by 10 percent to Sh29.12 billion, helping to lift total operating income to Sh80.65 billion from Sh71.69 billion.
Co-op Bank’s operating expenses increased by 17.7 percent to Sh46.69 billion as it stepped up provisions for loan losses by 44.2 percent to Sh8.66 billion from Sh6 billion and staff costs rose by 9.8 percent to Sh18.32 billion.
The higher provisions came as gross non-performing loans rose 6.1 percent to Sh71 billion.
The rise in Co-op’s staff costs was on the back of increasing its branch network by 17 to 211. The additional branches were spread among the parent bank and its subsidiaries —Kingdom Bank and Co-operative Bank of South Sudan.
The additional branches coincided with the period when Co-op Bank’s headcount increased by 463 to 5,863 employees.
Subsidiary profit
Kingdom Bank, which is 90-percent owned by Co-op Bank, saw its net profit retreat to Sh548.9 million from Sh655 million due to a higher tax charge.
Co-op Consultancy & Bancassurance Intermediary Limited posted a pre-tax profit of Sh1.2 billion from Sh877.1 million, while Co-operative Bank of South Sudan returned a pre-tax profit of Sh11.1 million.
Co-op Trust Investment Services Limited contributed Sh386.4 million in pre-tax profit from Sh226 million as the subsidiary’s funds under management grew by 74.4 percent to Sh381 billion.
During the period, Co-op Bank’s asset base grew by 10.7 percent to Sh743.19 billion, while customer deposits grew by 12 percent to Sh506.11 billion. The loan book ended the year at Sh373.7 billion compared to the previous year’s Sh374.2 billion.
“The Co-operative Bank Group continues to pursue strategic initiatives that focus on resilience and growth in the various economic sectors,” said Mr Muriuki.
