United Traders Sacco (UTS) Society, based in Machakos County, had its balance sheet size increase significantly from KSh 1,497,680,078 in 2022 to KSh 1,527,734,079 in 2023.
- •According to the UTS Society financial performance review, its net loans and advances to members grew from KSh 1,197,505,233 in 2022 to KSh 1,228,981,455 in 2023.
- •Members’ deposits increased from KSh 839,840,954 in 2022 to KSh 910,538,880 in 2023.
- •The UTS Society Gross Turnover was up from KSh 239,120,917 in 2022 to KSh 240,505,398 in 2023.
The Society’s Board of Directors has recommended a dividend payment of 5% on share capital and interest on members ‘deposits of 1.5% for 2023.
“The board never revised interest rates charged on members owing to the hard economic times and although this is beneficial to members, this had a negative impact on the Society’s financial performance, “said UTS Board Chairman Fredrick Ngumbi at the UTS 6th Annual Delegates Meeting(ADM) held on March 8th 2024 at Lysak Haven Park, Machakos.
Due to an intense funds mobilization drive by UTS Sacco, the Society cut its external borrowing needs in 2023 to zero, except in December 2023 to meet festive season cash demands. It has complied with all prudential regulatory and capital adequacy ratios except the liquidity ratio, expense-to-income ratio and the Portfolio at Risk (PAR).
The Society has received loans worth KSh 150 Million from Micro Enterprise Support Programme Trust (MESPT) and is awaiting another application worth KSh 250 Million made to Kenya Development Corporation (KDC).
“The Board has since signed the MESPT offer letter, at 6% and is yet to receive a response from KDC. Once the two facilities worth KSh 550 Million are disbursed, the Board shall be in a position to retire the expensive loans,” said Ngumbi.
NPLs, and a 4 Year Plan
The Society, according to the Board, also had its financial performance affected by non-performing loans that are currently under recovery by the Society’s collection team, auctioneers, and the court process. Further, most of these non-performing loans interest accruals have been suspended due to a court process of the duplum rule.
“The Board has developed and deployed necessary mechanisms to ensure all non-performing loans are dully recovered and moving forward minimize on default risks,” he added.
The Board of UTS has developed a new 2024-2028 strategic plan whose objectives shall be growth in membership, financial sustainability and growth, improved service delivery through ICT, Organizational sustainability and growth, embedding best practices in organizational structure and operationalization and improved productivity. The Society is still waiting for regulatory approval before introducing digital banking and the Sacco agency.
The Society Board told delegates at the annual meeting that it will review all the SACCO policies that have been in place for more than two years. This is to ensure that they address the current business dynamics and mitigate operational, market, credit and all inherent risks in the financial services industry.
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