Savings and Credit Cooperative Societies (saccos) are set for a key liquidity boost in Cooperative Bank of Kenya’s Sh5.86 billion dividend payout amid Covid-19 disruptions.
The lender last week defied expected dividend freezes and cuts in the market to announce Sh1 per share payout–same as last year–offering the cooperative movement in Kenya the much -needed shot in the arm.
The bank’s strategic and majority shareholder, Co-op Holdings Co-operative Society, which represents Kenya’s co-operative movement is in line to receive a dividend of Sh3.79 billion.
Dividend payout in current Covid-19 economic disruptions will boost the liquidity of co-operatives at a time they need to strengthen their businesses and support members through loans and dividends.
The payout, set for mid-next month, is for its 64.5 percent stake in the Nairobi Securities Exchange-listed lender, which booked Sh10.81 billion net profit for the financial year ended December 2020.
Kenyan co-operatives will have earned Sh19.4 billion in dividend payments from Co-op Bank in the last six years.
22,000 societies
Co-op Holdings Co-operative Society chairman Macloud Malonza said the uniqueness of the co-operative financial system means over 22,000 societies and saccos will benefit.
Co-op’s bullish approach in retaining dividends was partly because of its outsized consumer lending that is heavily leaning on public sector payrolls that continue to enjoy full incomes despite the pandemic.
The bank also has significant lending exposure to its strategic market segment – the saccos–such as Harambee, Stima, Kenya Police, Sheria, Ushuru, Ukulima and Afya.
Co-op also has strong capital buffers, reinforced by Sh74.58 billion retained earnings on the back of a conservative dividend policy.The consistent trend in dividend payout by Co-op Bank has enabled co-operatives to recoup and exceed their entire initial investment in the bank.Co-op went public in 2008 at an offer price of Sh9.5, equivalent to an aggregate value of Sh33.2 billion. Co-operative movement’s stake in the tier I lender is currently worth about Sh50 billion amid the current depressed equities market prices.The lender wants to make the payout and later on get shareholders’ nod at the next annual general meeting in line with Capital Markets Authority guidelines.The dividend payout is expected to offer the most needed relief and offer a boost to ongoing efforts to mitigate the severe economic hardships caused by the Covid-19 pandemic.The lender has maintained focus on deepening ties with the cooperatives movement and runs a dedicated business division to support co-operatives.Co-op Bank chief executive Gideon Muriuki says the bank will continue […]