Co-op Bank raises interim dividend 50% as profit jumps to Sh27.4bn

Co-operative Bank is set to distribute Sh8.8 billion to shareholders after its earnings surged over the first nine months of 2026, allowing the lender to increase its interim dividend by half as it benefited from stronger income and improved loan recovery.

The bank announced an interim dividend of Sh1.50 per share, up from Sh1 paid in the corresponding period last year, after its net profit rose to Sh27.43 billion from Sh21.56 billion, representing a 27.2 per cent increase.

The latest payout marks the second time the lender has rewarded investors with an interim dividend since it was listed on the Nairobi Securities Exchange in 2008, having introduced the arrangement last year.

Shareholders will receive the dividend on or about December 4, 2026, provided their names are captured in the bank's register by the close of business on November 25.

The improved performance has also translated into stronger returns for investors, with the bank's share price appreciating by 49.5 per cent since January.

Co-op Holdings Co-operative Society Limited, which controls 64.56 per cent of the lender, will receive Sh5.68 billion from the distribution, making it the biggest beneficiary of the dividend declaration.

The growth in earnings was driven by an increase in revenue from lending and other banking activities. Net interest income rose by 12.7 per cent to Sh51.03 billion from Sh45.27 billion, while non-interest income increased by 9.2 per cent to Sh24.14 billion compared with Sh22.11 billion in the previous corresponding period.

The combined growth pushed operating income to Sh75.2 billion, an 11.6 per cent improvement over the nine months.

Despite the expansion in business, the bank managed to keep the rise in operating expenses relatively moderate, with costs increasing by 5.3 per cent to Sh39.72 billion.

Staff expenses were among the major contributors to the increase, climbing by 12.7 per cent to Sh16.96 billion as the lender expanded its workforce and branch network.

However, Co-op recorded considerable savings on loan-loss provisions, which fell by 34.2 per cent to Sh4.84 billion from Sh7.35 billion. The reduction helped support the growth in profitability during the review period.

The lender also reported progress in addressing bad loans, with its non-performing loans ratio falling to 12.9 per cent from 17.1 per cent a year earlier.

The total value of non-performing loans declined to Sh71.67 billion from Sh78.93 billion, reflecting an improvement in the bank's loan portfolio.

"We continued to strengthen asset quality through proactive credit management, customer engagement and portfolio monitoring," said Gideon Muriuki, the managing director at Co-op Bank.

The lender attributed part of its increased expenditure on employees to its continued investment in expanding operations and improving its capacity to serve customers.

Its branch network grew to 224 by the end of September, compared with 217 in the same period last year. Over the same period, the number of employees increased from 5,826 to 6,630.

"Staff numbers increased to 6,630, reflecting continued investment in people and operational capacity, creating a total of 804 new jobs since the third quarter of last year," said Muriuki.

The bank's subsidiaries also contributed to the group's improved financial performance, with several reporting higher profits across their respective businesses.

Kingdom Bank, in which Co-operative Bank holds a 90 per cent stake, recorded a 65.4 per cent increase in net profit to Sh872.96 million from Sh527.59 million. Its performance was supported by growth in retail and business banking.

Co-op Bancassurance Intermediary Limited posted a pre-tax profit of Sh1.39 billion, compared with Sh1.15 billion in the previous corresponding period, as its customer base continued to expand.

In South Sudan, Co-operative Bank of South Sudan recorded a pre-tax profit of Sh528 million, representing a 5.6-fold increase from Sh93.5 million a year earlier.

Co-op Trust Investment Services Limited also strengthened its contribution to the group, reporting a pre-tax profit of Sh966.8 million, up 54.8 per cent from Sh624 million.

million from Sh89.9 million, benefiting from increased activity in the capital markets.

The group's overall financial position also strengthened, with total assets expanding by 11.3 per cent to Sh907.44 billion from Sh815.27 billion.

Customer deposits increased by 15.4 per cent to Sh633 billion, providing the lender with a larger pool of funds to support its banking operations.

At the same time, the bank's loan book grew by 22.2 per cent to Sh496.88 billion from Sh406.52 billion recorded in the corresponding period last year.

The expansion in assets, deposits and lending came alongside improved profitability, allowing Co-op Bank to increase shareholder returns while continuing to invest in its workforce and branch network.