Unaitas Sacco has announced a 66 per cent growth after-tax profit for the full year ended December buoyed by new members and increased lending.
The financial services firm reported net earnings of Sh428 million up from Sh258 million the previous year.
Despite the profit growth the sacco’s management has proposed lowering dividend payout to its members at seven per cent a share down from eight per cent the previous year.
Lower dividend payout boosts the union’s institutional capital which is thinly above the statutory minimum.
“We are glad to also announce that our institutional capital to total asset stood at nine per cent as at December 2015 given that the minimum requirement is eight per cent,” said Unaitas chairman Joseph Ngaai.
Institutional capital refers to a sacco’s total revenue and statutory reserves.
The lender’s loan book expanded 54 per cent to Sh7.4 billion up from Sh4.8 billion resulting in a 30 per cent growth in interest income. Consequently the loan loss reserve rose sharply to Sh139 million from Sh43.1 million which also explains the fall dividend.
Interest income grew to Sh1.09 billion in December 2015 compared to Sh840 million the previous year.
Member deposits rose to Sh5.3 billion from Sh4.2 billion following enrolment of new people.
Unaitas membership grew to 230,355 as at December 2015 compared to 164,506 the previous year.
The sacco usually targets entrepreneurs running small businesses and individuals borrowing small amounts with average loans ranging between Sh10,000 and Sh200,000 for micro and SMEs.
Unaitas has made public its ambitions of converting into a bank by end of 2018 and list at the Nairobi Securities Exchange. The financier has been undergoing capital restructuring to make it compliant with the statutory banking requirements while keeping it in the good books of the sacco Societies Regulatory Authority.
“We are investing heavily in capital projects, first because it is the right thing to do for a very competitive sector, secondly to increase shareholder value, and more importantly our pursuit to become a bank with a difference,” said Mr Ngaai.
Its share capital rose to Sh2.3 billion, nearly double Sh1.4 billion the previous year.
The sacco’s asset base grew by 35 per cent to Sh9.3 billion from Sh6.9 billion while core capital rose to Sh3.6 billion from Sh2.3 billion.
The sacco’s core capital to total assets ratio is at 39 per cent against a mandatory requirement of 10 per cent while the core capital to deposit ratio rose to 67 per cent against a statutory eight per cent giving the lender a huge headroom