By Flavia Atieno
Kenya National Police Deposit Taking Sacco received upgrade on its credit scored from the international agency Global Credit Rating (GCR).
Its national scale issuer ranking has been upgraded to BBB+(KE) /A2(KE) from BBB(KE) /A3(KE), with a positive outlook.in new GCR rating.
The exemplary ratings on Kenya National Police DT Sacco reflected its favourable asset quality relative to financial sector peers, good capital, leverage, and sound funding and liquidity.Â
The Sacco achieved a GCR leverage ratio of 31.73 per cent for the financial year 2020 up from 29.51 per cent in the previous year.
This pointed to its strong capital position that is a key rating strength.
The rating agency noted that its strong capital position would persist into the long term, supported by a sustainable dividend payout ratio and strong earnings.Â
“The lending book is diversified and the top 20 NPLs form 0.19% of the total loan book. This risk profile could change should the SACCO increase exposure to SMEs which are viewed to be a more vulnerable sector. While an increase in NPLs were noted in FY20 (due to the pandemic and other operational environmental factors), we expect NPLs to trend below 1.5% over the next 12-18 months,” said GCR.
Non-withdrawable deposits account for about 90% of total customer deposits in the last fiscal year, ensuring its funding structure remains stable. According to GCR, its top 20 depositors account for 0.71% of total deposits.
The positive outlook was premised on GCR’s expectation of sustained capital strength (GCR leverage ratio above 25%), driven mainly by solid earnings and a conservative dividend policy. The risk position is expected to remain better than peers, albeit elevated compared to past levels because of the effects of the pandemic on the economic environment. The liquidity position is expected to remain adequate and the funding stable.
