The deposit-taking Metropolitan National Sacco ‘s (SACCO) turnaround strategy initiated in July 2019 is working.
The Sacco which was saddled with Sh1.2 billion Non-Performing Loans (NPL) recovered over Sh110 million from NPLs as a result of improved debt collection efforts.
Metropolitan Sacco also saw loans extended to members increase by Sh1.59 billion last year, closing at Sh13.52 billion in the period ended December 31.
The Sacco, founded over 40 years ago has a membership of over 100,000 drawn from teachers and other civil servants as well as the private sector. It was not always this way; the increased membership is due to the changes done in 2009 when the Sacco’s management opened it up to non-teachers.
In 2018, the net interest income within the period dipped marginally from Sh1.13 billion to Sh1.05 billion last year. This was on the back of a reduction in interest on loans and advances.
A statement by the Sacco stated that deposits by members grew by 6 per cent to close at Sh7.32 billion. This, the management said, was driven by deposit mobilisation campaigns which resulted in increased patronage by committed members and improved remittances from employers.
In their rebound strategy, Metropolitan revealed that they attracted new members, retained those who wanted to leave and brought back those who had left.
“Following the approval of the transformation strategy at the 2019 Annual General Meeting (AGM), we have recruited an additional 167 new members and received 2070 membership reinstatements from the previous period. In that period, we have also seen a rise in the number of members wishing to reverse their earlier requests to withdraw their membership,” CEO Benson Mwangi said.
Cost reduction strategy
“The operational efficiency initiatives resulted in an overall cost reduction of Sh96 million, mainly driven by savings in financial and administrative expenses which were further powered by enhanced uptake of digital service delivery channels.”
The Sacco paid interest on deposits at the rate of 6.25 per cent, up from six per cent in 2018. The interest on members’ deposit rose to Sh367 million from Sh334 million the previous year.
In an increasingly trend as deposit-taking Saccos seek to boost their capital and liquidity, 50 per cent of the interest rebate was retained as deposits while the rest was paid out in cash.
Dividends on shares have been paid at 6.25 per cent compared to six per cent in 2018.
The board said it had embarked on the second phase of the transformation strategy, which involves leveraging on technology. This, the management believes will lead to more efficient service delivery.
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