Co-operative Bank’s chief executive Gideon Muriuki. FILE PHOTO | NMG Co-operative Bank’s chief executive, Gideon Muriuki, earned Sh260.3 million in bonus last year, the largest in the banking industry, under the bank’s performance-based reward system for staff.
The lender says it rewarded the CEO for protecting shareholder returns while navigating the bank through the Covid-19 pandemic.
Mr Muriuki’s bonus dropped from Sh271 million in 2019 but dwarfed those paid to CEOs of rival big banks which were slashed by larger margins.
KCB , NCBA , Standard Chartered Bank Kenya and Absa Bank Kenya reduced or froze bonuses for their CEOs in the year ended December, saving a combined Sh262.3 million.
Equity and I&M were the exception, raising their CEOs’ bonuses by Sh4.7 million and Sh4.6 million respectively.
Unlike other large banks, Co-op Bank stood out for maintaining dividend payouts, hiring more employees, paying them more and expanding in the midst of the pandemic through its acquisition of Jamii Bora, which it renamed Kingdom Bank.
“A key pillar of this transformation has been the board of directors successfully implementing a performance-based bonus reward system applicable to all staff,” Co-op Bank says in its latest annual report discussing executive management compensation.
“In 2020, the group acquired 90 percent stake in Kingdom Bank … with over 444,000 customers in 17 branches. The acquisition offers Co-op Bank the opportunity to cross-sell and deepen product offering to the enhanced customer base.”
Mr Muriuki was part of the bank’s staff whose salary and bonuses rose to Sh13.4 billion in the review period from Sh12.4 billion a year earlier.
The Nairobi Securities Exchange-listed firm maintained its dividend payout of Sh1 per share in both 2019 and 2020, distributing a total of Sh11.7 billion in the two years.
KCB, Equity , I&M , NCBA , StanChart, Absa and DTB on the other hand cut their dividends by a total of Sh40.5 billion over the two years, citing the need to prepare their balance sheets for the economic fallout from the pandemic.The banking sector posted a 20 percent net profit drop to Sh88 billion in the year ended December compared to Sh110.1 billion a year earlier, according to Central Bank of Kenya (CBK) data.The weaker bank earnings were mainly caused by loan loss provision swelling to Sh110.2 billion from Sh39.2 billion as the lenders braced for increased defaults in the wake of increased job losses, lockdowns and business disruption in the pandemic era.Co-op Bank’s net income declined 24.4 […]