Kenya Police Sacco Society Limited has been given a stable outlook by Global Credit Rating (GCR). The rating agency attributes the favourable ranking to the Society’s strong capital position, solid risk position, and adequate funding and liquidity.
Kenya Police Sacco is a non-bank financial institution operating in Kenya with members from the national police force and their direct family members.
In 2018, Kenya Police Sacco was the third biggest deposit-taking Sacco in Kenya, with a 10.1% deposit market share.
“Therefore, we consider its business stability and competitive position versus other deposit-taking Sacco’s in Kenya to be good. Furthermore, we believe that the role and status of the entity has inherently garnered strong customer loyalty and helped maintain a good history of revenue stability,” said Global Credit Rating in its report
The Rating agency said that Kenya Police Sacco has a strong capital position that is supported by strong internal capital generation as a result of strong earnings, shown by a higher than market Return on Assets of 5.8%
Global Credit Rating expects the strong capital position to persist in the long term, as supported by a sustainable dividend payout ratio.
Kenya Police Sacco’s risk position is in line with deposit-taking Sacco peers, but better than the wider financial institutions sector.
This is supported in part by the Sacco model, which includes salary deductions, collateral and suretyship within its underwriting process, no foreign currency lending and small lending concentrations.
The funding and liquidity position of Kenya Police Sacco reflects the very stable funding structure, with ‘non-withdrawable’ deposits accounting for over 80% of total customer deposits in the 2018 financial year.
“The outlook is stable. We expect the capital position to remain strong at a level above 20%, driven mainly by strong earnings and a more conservative than peers’ dividend policy. The risk position is expected to remain in line with direct peers, but better than the sector,” said the Global Credit Rating report.