Investors and analysts, during the peak of Covid-19 infections, did not expect payouts to snap back quickly to 2019 levels. Kariuki Ngari, the chief executive of Standard Chartered Bank of Kenya, says he does not need to “hold anything in excess” like in 2020 when Covid-19 disruptions convinced him to conserve cash.
At the time, Stanchart’s net profit for the year had declined by a third, prompting the board to slash dividends from the 2019 level of Sh20 per share to Sh12.50.
Three months later, Mr Ngari had to come back to investors with more bad news; the board had cut the dividend further to Sh10.50 to preserve cash.
But not this time around. StanChart Kenya investors will get Sh7.18 billion in dividends after the lender raised the payout on the back of a five-year record high in profits.
The lender, which paid Sh5 per share as an interim dividend, is set to give investors Sh14 per share come May. The total payout beats the previous one of Sh3.97 billion.
“The board is very clear that we want to make sure the business will retain enough capital, and we don’t need to hold anything in excess. When we don’t need the capital, we give it back to shareholders, and that remains,” says Mr Ngari.
Stanchart’s move is replicated across Kenya’s banking sector as the deadline for declaring the 2021 earnings closes on Thursday next week.
The move signals the end of a sudden cut or drought in payouts experienced in 2020 from a sector that had for years been hailed as a consistent dividend-payer.
Banks that had cut or frozen payouts, including Stanchart, KCB, Equity and Absa, are either increasing or reviving payouts, while those that maintained them in the pandemic — such as the Co-operative Bank of Kenya (Co-op Bank) — are expected to continue.
Co-op Bank, which saw a 53 per cent jump in net profit to Sh16.5 billion, has maintained payout at Sh1 per share, totalling Sh5.86 billion.
The lender braved the Covid-19 disruptions to maintain the same level of payouts in 2020 when its tier I peers opted for cuts and freezes to preserve capital.“The board of directors of Co-op Bank made the bold decision to sustain the same level of dividend to shareholders even during the Covid-19 crisis when many other banks and listed companies decided to withhold dividends,” said Chief Executive Gideon Muriuki.Mr Muriuki said the decision was informed by the awareness that […]