Companies

Co-op Bank share surge doubles investors’ wealth

Co-operative Bank’s share price has surged to an all-time high of Sh21on the back of double-digit growth in profit, more than doubling shareholder wealth since its public listing about six years ago.

The bank’s market capitalisation stood at Sh85 billion on Wednesday, more than double the valuation when the lender was listed at the Nairobi Securities Exchange (NSE) in 2008 at a price of Sh9.50 per share.

Co-op Bank CEO and single largest individual shareholder Gideon Muriuki as well as the savings and credit co-operative societies (saccos) that hold majority shares of the lender are the biggest beneficiaries of the lender’s growth.

“Local retail and high net worth investors appeared pleased by the bonus share issue (of one for every six shares) leading the bank higher,” said the Standard Investment Bank in a report following release of Co-op’s results on Wednesday.

The lender posted 17.9 per cent growth in net profit to Sh9.1 billion last year and retained its dividend payment at Sh0.50 per share for the second year in a row.

READ: Co-op Bank pulls ahead of Barclays in profit rankings

Mr Muriuki will earn a dividend payout of Sh87.5 million from his 2.09 per cent stake in the bank while Kenya’s co-operative movement — which owns 64.56 per cent of Co-op Bank — tops the list of shareholders earnings total dividend of Sh2.7 billion.

Mr Muriuki’s holding in the lender is now valued at Sh1.7 billion, ranking him among Kenya’s wealthiest CEOs.

The chief executive has consistently increased his holding in the bank from 1.95 per cent in 2008 to the current 2.09 per cent stake.

He joins the ranks of billionaire chief executives who hold sizeable stakes in the companies they lead, including James Mwangi of Equity Bank, Benson Wairegi (Britam), ScanGroup boss Bharat Thakrar and Pradeep Paunrana of ARM Cement.

READ: Top bank owners earn billions in dividend payouts

The co-operative movement owns the home-grown lender through Co-op Holdings Co-operative Society Ltd, a holding company bringing together more than 3,800 Kenyan saccos.

The value of the saccos’ stake has more than doubled to Sh55.4 billion compared to Sh25.7 billion at the time of listing.

The saccos have earned a total of Sh5.6 billion in dividends since 2008 from Co-op Bank.