Co-operative Bank Managing Director Dr Gideon Muriuki, Bank Chairman John Murugu and Vice-Chairman Macloud Malonza getting ready to host the bank’s virtual Annual General Meeting at the bank’s boardroom Thursday 22 October 2020. The AGM ratified the Sh5.9 dividend paid out to shareholders in April this year, and the acquisition of Jamii Bora Bank, now renamed Kingdom Bank. [Photo: Standard]
Co-operative Bank shareholders yesterday ratified a dividend payout of Sh5.9 billion, bucking a trend where lenders have recalled the payment.
The bank maintained a dividend of Sh1 per share in its annual general meeting yesterday, the same that was paid in 2018.
Co-operative Bank is among the few banks that did not recall their dividend following a rout that had seen the profitability of most lenders take a sharp decline.
After the outbreak of the Covid-19 pandemic, the three top-tier banks recalled their payout to shareholders as the pandemic roiled the financial markets.
“The payment represented a most timely injection of liquidity to shareholders and notably the 15 million-member co-operative movement to mitigate the economic ravages of the pandemic,” said Co-operative Bank Managing Director Gideon Muriuki.
Co-op Holdings Co-operative Society, in which cooperative societies hold a 64.5 per cent shareholding, received a dividend of Sh3.79 billion.
In the first half of this year, Co-operative Bank reported a 3.6 per cent drop in earnings after tax.
The lender posted Sh7.2 billion in profit as increased loan loss provisions ate into operating income, pointing to tough times occasioned by the Covid-19.
Loan loss provision
In a similar period in 2019, the bank had made a net profit of Sh7.5 billion.
Consequently, the bank set aside Sh1.87 billion as insurance against possible defaults by customers distressed by the crisis between January and June.
This was an increase of more than half from the Sh1.18 billion that the lender set aside in loan loss provisions over a similar period last year.
The increase in loan loss provisions reflects a tough economic environment brought on by the adverse effects of Covid-19, with a lot of borrowers either defaulting or being forced to renegotiate the terms of their loans.
This year, Co-operative Bank completed the acquisition of local lender Jamii Bora, which has since been renamed Kingdom Bank.
It also made sweeping changes to the board of its new subsidiary.
Yesterday’s virtual AGM also re-elected Wilfred Ongoro, Lawrence Karissa and Margaret Karangatha to the board for a term of three years, and also ratified the election of Weda Welton as a director of the company.
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