Co-operative Bank has projected paying a higher dividend at the end of this financial year, riding on improved earnings in the first quarter of 2022. The bank’s management expects profits to grow significantly by December, which would give legroom to up the dividend payout.
The bank, listed at the Nairobi Securities Exchange, has maintained a dividend payout of Ksh1 per share since 2018. Dr Gideon Muriuki, Co-op Bank CEO and Managing Director, says an impressive first quarter profit has given management confidence to forecast increased profit and, in turn, higher dividend for the full year.
Co-op Bank Group reported a profit before tax of Ksh7.78 billion for the first quarter of 2022, an impressive 56% growth from Ksh4.98 billion recorded in the first quarter of 2021.
“Like I said earlier with the much better performance now, this time next year the chairman will be here possibly supporting a much better dividend than we are paying today,” said Dr Muriuki during the bank’s AMG held virtually on 27th May 2022.”
The bank made an aggregate payout of Ksh11.7 billion for the 2019 and 2020 financial years when the economic fallout from Covid-19 slowed down bank earnings and ate into its capital.
This year looks promising. “With the good performance we’ve seen already with the Ksh7.8 billion profit before tax in the first quarter, all things equal I know the board chairman will not shy to recommend a higher dividend this coming year,” he said.
Other listed banks reduced or suspended dividend payments for the 2019 and 2020 financial years and have since reinstated cash distributions at the pre-Covid-19 levels or higher.
Co-op Bank chairman, Mr John Murugu, said the Ksh1 per share dividend for the year ended December 2021 is consistent with the bank’s policy of rewarding shareholders while retaining earnings to fund growth.
About 30, or half of the firms whose shares are trading on the NSE, have failed to pay dividends on their performance for the last financial year. Only a few firms can cite the Covid-19 disruptions, but a majority had dropped dividend payouts from their menu even before the virus hit the world.