Co-op Bank has indicated that it will pay a higher dividend for the year ending December when it expects its earnings to have grown substantially.
The bank has maintained a dividend payout of Sh1 per share from 2018 to last year.
The Nairobi Securities Exchange-listed firm says its profit growth in the first quarter ended March has given it the confidence to issue a guidance for higher dividends and profit for the full year to December.
Its net income in the quarter rose 68.8 percent to Sh5.8 billion on a surge in non-interest income.
“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,” Co-op Bank’s chief executive Gideon Muriuki said at the bank’s annual general meeting on Friday.
“With the good performance we’ve seen already with the Sh7.7 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.
He added that the flat dividend should be looked at in the context of the bank having made an aggregate payout of Sh11.7 billion for the 2019 and 2020 financial years when the economic fallout from Covid-19 slowed down bank earnings and ate into their capital.
A shareholder asked why the lender’s dividend payout has been static.
Other listed banks reduced or suspended dividend payments for the 2019 and 2020 financial years and have since reinstated cash distributions at the pre-pandemic levels or higher.
Co-op Bank chairman John Murugu said the Sh1 per share dividend for the year ended December is consistent with the bank’s policy of rewarding shareholders while retaining earnings to fund growth.
Mr Muriuki said the potential sources of uncertainty are the upcoming elections and economic upheavals from geopolitical events.
