Co-op Bank owners recoup capital from large dividends

Co-op Bank’s #ticker:COOP owners will recoup their entire capital from dividends alone this year, with long-term investors such as Co-op Holdings Co-operative Society and the lender’s CEO Gideon Muriuki recording the largest returns.

The Nairobi Securities Exchange-listed firm went public in 2008 at an offer price of Sh9.5, equivalent to an aggregate value of Sh33.2 billion.

Co-op Bank’s expected dividend payout for the year ending December 2019, assuming it is maintained at the Sh5.8 billion paid for 2018, will take the lender’s cumulative payouts to Sh34.7 billion.

This will surpass the capital provided by the lenders’ owners by Sh1.5 billion.

At the bank’s annual general meeting Thursday, Mr Muriuki told shareholders that investors who owned shares in the company prior to its listing have already earned dividends equalling their initial investment.

Shareholders approved a final dividend of Sh1 per share totalling Sh5.8 billion on the results of the year ended December, being the highest payout in the history of the bank.

“This year’s Sh1 dividend matches the entire initial investment by the co-operative movement in the bank thereby enabling them to recoup their investment in full, and can be regarded as ‘shilling-for-shilling’ dividend payout,” Mr Muriuki said. Co-op Bank has not asked shareholders to provide new capital since listing and has instead funded its growth by retaining part of its earnings.

Co-op Holdings Co-operative Society, which has a 64.56 percent stake in the lender has committed to remaining a shareholder in the bank, a move that will see its dividend income rise even as it books paper gains.