Co-operative Bank of Kenya’s chief executive, Gideon Muriuki, bought 14.6 million shares of the lender currently worth Sh173 million in the six months to June 2023, restoring his ownership to a 2.0 percent stake.
Regulatory filings show his shareholding rose from 1.75 percent in December 2022 to 2.0 percent in June, cementing his position as the top individual investor in the Nairobi Securities Exchange-listed firm.
Shareholding by a company’s insiders — executives and directors — are seen as a signal of confidence about the company’s prospects.
This is especially the case when such insiders buy the shares in the market with own money. Other listed companies’ executives also hold significant stakes in their firms but the shares are largely the result of grants or heavily discounted options issued as part of their compensation.
Mr Muriuki previously held a two percent stake in Co-op Bank but sold part of the shares in 2020, lowering his ownership to 1.75 percent.
Co-op Bank’s shares traded at a range of between Sh11.15 and 13.35 in the six months to June, according to market data.
The bank is among the listed lenders that are undervalued by historical standards despite growth in earnings and dividends.
The current market value prices Co-op Bank at three times its earnings and 64 percent of its net assets. Its dividend yield stands at 12.7 percent.
The company raised its dividend payout by 50 percent to Sh1.5 per share in the year ended December 2022.
The lender’s net profit grew 5.8 percent in the half year ended June to Sh12.1 billion as interest expenses expanded faster compared to income from lending and non-lending sources.
The bank had posted a net income of Sh11.4 billion a year earlier. Total interest income increased 11.9 percent to Sh31.9 billion, helped by the loan book expanding by 10.7 percent to Sh365.3 billion.
The bank’s investment in government debt securities also increased from Sh183.1 billion to Sh188.4 billion, contributing to the interest income pool.
Co-op Bank’s non-interest income rose 3.9 percent to Sh13.8 billion, partly aided by transactions on its mass-market mobile wallet MCo-op Cash.
The platform had five million customers registered and Sh41.3 billion in loans disbursed in the review period, amounting to an average of Sh6.9 billion per month.
Interest expenses surged 38.9 percent to Sh10.4 billion amid growth in customer deposits in an environment of rising interest rates on various assets including fixed deposits.
The bank’s customer deposits increased by Sh40.8 billion to Sh463.8 billion, bolstering its funding sources.
