Ranking and Analysis and of Kenyan Deposit-Taking SACCOs Based on 12 Performance Indicators (2022-2023)

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This analysis examines the performance of Deposit-Taking Savings and Credit Cooperative Societies (DT-SACCOs) in Kenya for 2022 and 2023, categorized by key financial metrics. We have analysed data provided by SASRA.

1. CAPITAL ADEQUACY

Capital adequacy measures the financial strength and stability of SACCOs to withstand potential losses.

Core Capital to Total Assets

• Regulatory minimum: 10%
• Top performers (2023):
  1. Winas: 33.89%
  2. Kenya National Police DT: 33.03%
  3. Unaitas: 33.02%
• Most large and medium-sized SACCOs meet or exceed the regulatory requirement.
• Some SACCOs show improvement from 2022 to 2023, while others experienced slight declines.

Core Capital to Total Deposits

• Regulatory minimum: 8%
• Top performers (2023):
  1. Invest and Grow: 66.34%
  2. Unaitas: 59.62%
  3. Winas: 59.05%
• The majority of SACCOs maintain ratios well above the minimum requirement, indicating strong capital positions relative to deposits.

Institutional Capital to Total Assets

• Top performers (2023):
  1. Azima: 32.16%
  2. Winas: 30.90%
  3. Faridi: 30.54%
• This ratio indicates the level of internally generated capital, with higher percentages suggesting greater financial stability.

2. EARNINGS

Earnings metrics assess the profitability and efficiency of SACCOs.

Total Income to Total Assets

• Top performers (2023):
  1. Ng’arisha: 21.71%
  2. Taqwa: 21.39%
  3. Nawiri: 19.05%
• Higher ratios indicate more efficient use of assets to generate income.
• The range varies significantly across SACCOs, suggesting diverse operational efficiencies.

3. ASSET QUALITY

Asset quality primarily focuses on the loan portfolio’s health and the level of non-performing loans.

Non-Performing Loans (NPL) Ratio

• Top performers (lowest NPL ratios, 2023):
  1. Newfortis: 0.64%
  2. Azima: 0.71%
  3. Nawiri: 0.72%
• Lower ratios indicate better loan portfolio quality.
• Some SACCOs show concerning high NPL ratios, e.g., Dumisha (93.43%) and Jumuika (94.03%), indicating significant credit risk.

Gross Loans to Total Assets

• Top performers (2023):
  1. Stima DT: 83.52%
  2. Kenya National Police DT: 86.19%
  3. Boresha: 87.58%
• Higher ratios suggest a larger portion of assets is being utilized for lending, but may also indicate higher risk.

4. LIQUIDITY

Liquidity ratios measure a SACCO’s ability to meet short-term obligations and member withdrawal demands.

Total Deposits to Total Assets

• Top performers (highest ratios, 2023):
  1. Metropolitan National: 86.59%
  2. Vision Point: 80.17%
  3. Cosmopolitan: 79.40%
• Higher ratios indicate strong member confidence but may also suggest lower diversification of funding sources.

External Borrowing to Total Assets

• Regulatory maximum: 25%
• Most SACCOs maintain ratios well below the maximum, indicating low reliance on external funding.
• Some SACCOs, like Trans-Counties (30.93%) and Kabiyet (30.76%), exceed the regulatory limit.

OTHER KEY METRICS

Asset Size and Growth

SACCOs are categorized into three tiers based on total assets:

1. Large Tier: Assets above KShs 5 billion
2. Medium Tier: Assets between KShs 1-5 billion
3. Small Tier: Assets below KShs 1 billion

Top 5 DT-SACCOs by Total Assets (2023):

1. Mwalimu National: KShs 66.43 billion
2. Stima DT: KShs 59.15 billion
3. Kenya National Police DT: KShs 54.24 billion
4. Harambee: KShs 38.57 billion
5. Tower: KShs 23.23 billion

CONCLUSION

The Kenyan DT-SACCO sector shows overall stability and growth, with most institutions meeting regulatory requirements. However, there is significant variation in performance across different metrics.

Large SACCOs generally demonstrate stronger financial positions, but some smaller SACCOs show impressive efficiency ratios.

Asset quality remains a concern for some institutions, particularly in the small-tier category.

To fully assess the sector’s health and individual SACCO performance, additional data on operational efficiency, market share, and member satisfaction would be beneficial.

Regular monitoring and analysis of these indicators are crucial for maintaining the stability and fostering the growth of the DT-SACCO sector in Kenya.