Savings and Credit Cooperatives (Saccos) defied a tough economy occasioned by high living cost to record growth in assets, deposits and gross loans.

The Sacco Supervision Annual Report 2023 released Wednesday by the Sacco Societies Regulatory Authority (Sasra) shows total assets grew by 9.17 per cent in the year under review to Sh971.96 billion from Sh890.3 billion in the previous year. 

Cumulative total deposits for regulated Saccos grew by 9.95 per cent, which is a slight increase from a growth rate of 9.84 per cent reported in 2022, whereas the cumulative total deposits increased in absolute amounts grew from Sh620.45 billion in 2022 to Sh682.19 billion in 2023.

"It is therefore observable that Regulated Saccos grew their deposits at a faster rate than the rate at which they grew their assets, which is a sign of elevated and continued member confidence and trust in the Sacco industry,'' Sasra boss Peter Njuguna said. 

Borrowing by members grew by a rate of 11.5 per cent, a marginal decline from 11.76 per cent recorded in 2022, with the cumulative total gross loans increasing in absolute amounts to Sh758.57 billion in 2023 from Sh680.35 billion.

Despite the overall marginal decline in the growth rate, the Authorised Non-Withdrawable Deposit Taking Saccos (NWDT) segment registered an increase in growth rate for gross loans at 12.85 per cent in 2023 compared to 8.90per cent recorded in 2022.

The DT-SACCO segment, however, recorded a decline in growth rate for gross loans from 12.24 per cent in 2022 to 11.28 per cent in 2023, indicating that there was an increased demand for loans in the NWDT Saccos segment compared to the DT-Saccos segment.

The membership of regulated Saccos increased from 6.42 million members in 2022 to 6.84 million members in 2023, representing a growth rate of 6.57 per cent.

During the period, the number of Saccos dropped from 359 to 357, implying that the total membership grew despite the reduction in the number of Saccos.

"This fortifies the hypothesis that membership of troubled Saccos whose licenses often end up being revoked, are usually taken over by other regulated entities with stronger balance sheets,'' Njuguna said. 

Even so, the market share analysis of regulated Sacco's total assets shows continued concentration of total assets in just but a few of them.

The large-tiered Saccos with assets above Sh5 billion increased from 47- in 2022 to 53, while their proportionate total assets market share increased to 73.3 per cent from 70.05 per cent. 

This means that the remaining 304 Saccos with assets of below Sh5 billion had only 26.7 per cent of the total assets’ market share, implying that on average, these Saccos have a small asset portfolio thereby bringing into question their sustainability.

A similar scenario was obtained regarding the concentration of deposit liabilities within the Sacco system, with 39 regulated SACCOs with deposit liabilities above Sh5 billion controlling a market share of 65.27 per cent of the total deposit liabilities.

This leaves 318 Saccos sharing the remaining market share proportion of just 34.73 per cent of the industry’s deposit liabilities, which is a further confirmation of the existence of very many small Saccos.

The DT-Saccos segment had their aggregate core capital increase by 7.14 per cent to reach Sh133.81 billion in 2023 from Sh124.89 billion recorded in 2022.

The NWDT -Saccos segment on the other hand had their aggregate core capital increase by 35.77 per cent to reach Sh14.46 billion in 2023 from Sh10.65 billion recorded in 2022.

The key capital adequacy ratios for DT-Saccos of core capital to total assets (CCA) and institutional capital to total assets (ICA) on the other hand were maintained at 16.07 per cent and 9.11 per cent respectively in 2023 which were equally above the regulatory minimum of 10 and eight per cent respectively. 

The NWDT-Sacco segment equally maintained its key capital adequacy ratios of core capital to total assets (CCA) and retained earnings to core capital (RCC) above the prescribed minimum thresholds at 10.4 and 62.5 per cent respectively.

Loans and credit advances form the largest proportion of Saccos' assets and amounted to Sh758.57 billion accounting for 78.05 per cent of the total assets in 2023.

"As the largest component of the asset, the quality and performance of the loan book is of paramount importance to the authority from a supervisory point of view but also to individual Saccos as it informs their financial sustainability,'' Sasra said.

In aggregate 86.33 per cent of the total loan portfolio of Saccos performed by contractual agreements and shows that a large proportion of loans are being repaid.

However, the non-performing loans ratio comprising loan accounts classified as substandard, doubtful and loss, marginally deteriorated to 8.45 per cent in 2023 compared to a ratio of 8.34 per cent in 2022.

Non-remitted funds owed by various employer institutions to Saccos amounted to Sh2.57 billion in 2023.