CO-OP BANK'S GRAND ENTRY INTO STOCKBROKING BUSINESS
Ladies and Gentlemen, we had opportunity two weeks ago to present to you our financial results for the year ended 2008 where we highlighted the following key performances of the Bank:-
- A remarkable growth in profitability before tax of 48% from Kshs.2.3 billion to Kshs.3.4 billion;
- Increased capitalization of the Bank with total capital standing at around Kshs.14 billion at the close of 2008 positioning us among the leading banks in terms of capital base in the country.
- Growth in all our key business lines including the loan book, transaction accounts and foreign exchange income;
- An expansion plan in the Bank's branch network to an expected over 80 branches by year end;
- The Bank plans for regional expansion to Southern Sudan and Uganda;
- Our entry into the mortgage business with the staff already recruited and the mortgage finance department already set up.
- The Banks strategy to further deepen its product offering in investment banking to diversify revenue base.
As you will be aware, Co-op bank's
strategic and
majority shareholder is the Co-operative Movement in Kenya with the following key highlights:
- A membership of over 12,000 Co-operative Societies;
- Over 5,000 registered Savings and Credit Societies (Saccos) which are key financial institutions in this country.
- Membership of over 7 million Kenyans with an implied over 50% of our entire population dependant on Co-operative-related activities.
- Total savings by the co-operative sector of over Kshs.170 billion or 30% of our Gross National Savings.
Given these strong pillars the Co-operative Movement has been and will continue to be a key player and participant in the development of the financial markets in Kenya and in particular the
Nairobi Stock Exchange (NSE).
In line with our
'Financial Supermarket'banking model, we have over the years made major investments in the area of investment banking to complement the standard retail banking services, notably;
- CO-OPTRUST INVESTMENT SERVICES LIMITED; a fully owned subsidiary which is now the leading locally-owned fund management company with Funds Under Management of over Kshs.17 billion; B]
- CO-OPERATIVE CONSULTANCY SERVICES LIMITED; our corporate finance and advisory services subsidiary which is a leading advisor to the clients in the Co-operative Movement;
- CUSTODIAL SERVICES; Co-op Bank is a licensed depository and registered custodian by the Capital Markets Authority and Retirement Benefits Authority respectively ; with a client base in excess of 70,000 CDS account-holders and assets under custody totalling Kshs.7 billion ; and
- SHARES REGISTRAR SERVICES; now a leading provider of shares and bond registrar services.
It is in this context that the Bank has taken a strategic decision to play a bigger role in the development of the stock market in Kenya. Our belief is that no Nation can prosper without a vibrant stock market which is a critical channel for wealth creation for its people and also a key barometer of its country's economic performance. It is in this regard that we believe that the current downturn in the stock market is cyclical and positive gains are sustainable going forward.
With this key strategic objective of playing a leading role in the Capital Markets, the Bank has successfully concluded discussions to diversify our business now further into stock-broking business by acquiring controlling interest (of 60%) in
Bob Mathews Stockbrokers Limited, one of 21 licensed stockbrokers at the Nairobi Stock Exchange (NSE). The company has stable customer base of over 12,000 CDS account holders making them a suitable strategic partner for Co-op Bank as we leverage on our wide distribution network.
This acquisition completes
'our financial supermarket model' for our clients particularly the 7 million member co-operative sector. The depth of our outreach through our expected over 80 branches by the end of the year, further complemented by the over 200 Front Office Activity Services (FOSAs) is further assurance that we will be able to take stock brokerage services close to the
Wananchi.
Our entry into stock-broking is hence to add value to our shareholders and our huge client base; well cushioned by a strong Group balance sheet given our recent re-capitalization at over
Kshs.14 billion.
The acquisition is subject to approval by:-
- Capital Markets Authority (CMA); and
- Shareholders of the Bank at the Annual General Meeting in May 2009.
With the acquisition of a majority stake in the company, the bank will be taking over FULL management control of the company that is proposed to trade under a new brand name;-
"Kingdom Securities Limited"
The company is expected to be a key player at the Nairobi Stock Exchange.
Thank you and God bless you.
GIDEON MURIUKI - OGW
MANAGING DIRECTOR & CEO
THE CO-OPERATIVE BANK OF KENYA LIMITED
