Companies

Co-op invests 372 million shillings in unit in South Sudan


Co-operative Bank branch along Haile Selassie Avenue, Nairobi. FILE PHOTO | NMG

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Summary

  • Last year’s additional investment was made during a period when Co-op Bank South Sudan reduced its net loss to 484.4 million shillings from 1.5 billion shillings in the first pandemic year of 2020.
  • The bank did not disclose the reason for the increased capital injection in South Sudan where it operates four branches.
  • The last disclosed major capital investment in the country, ravaged by years of civil war, was 305.55 million shillings in 2016.

Co-operative Bank has injected an additional 372 million shillings into its South Sudan branch, the first major investment in five years.

Last year’s additional investment was made during a period when Co-op Bank South Sudan reduced its net loss to 484.4 million shillings from 1.5 billion shillings in the first pandemic year of 2020.

“The Co-operative Bank of Kenya Limited has injected additional capital of Kshs 372 million into the Co-operative Bank of South Sudan in 2021,” the Nairobi Stock Exchange-listed company said in its latest annual report.

The bank did not disclose the reason for the increased capital injection in South Sudan where it operates four branches. The last disclosed major capital investment in the country, ravaged by years of civil war, was 305.55 million shillings in 2016.

The Kenyan multinational banking company created its only regional unit in 2013 by initially investing 1.5 billion shillings, giving it a 51% stake in the joint venture with the government of South Sudan, which owns the remaining 49%.

The lender, 64.6% owned by cooperative societies, has since 2013 injected at least 1 billion shillings of additional capital into the loss-making unit, bringing the cumulative investment to at least 2.5 billion shillings.

Banks operating in South Sudan face several challenges, including a significant devaluation of the country’s currency amid ongoing political violence.

“Since 2016, South Sudan’s economy was considered hyperinflationary. Accordingly, the financial statements of the Co-operative Bank of South Sudan, which are included in the Group financial statements, have been restated to reflect changes in the general purchasing power of the South Sudanese pound”, Co auditors -op Bank, EY, wrote in the latest annual report for 2021.

Co-op Bank’s profit for the year ended December soared 53% to 16.5 billion shillings. Performance was driven by a 14% increase in total interest income to 55.6 billion shillings, with the loan book and investments in government securities up 8.2% and 13. 6% to 310.1 billion shillings and 184 billion shillings respectively.

Co-op Bank has declared a dividend of 1 shilling per share, totaling 5.86 billion shillings, to be paid on June 17 to shareholders on the May 30 register.

The payout is the same as the previous two years when other listed banks suspended or cut dividends, citing heightened economic uncertainty due to the Covid-19 pandemic.

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