The group says in a letter signed by Chief Executive James Mwangi that “the Board has passed a resolution withdrawing the proposed dividend recommendation and instead will be recommending to the shareholders that no dividend is paid for the financial year ended December 31, 2019.”
Equity Group, which operates Equity bank across the East African region, has cancelled the payment of dividends to its owners from the earnings of last year.
The group says in a letter signed by Chief Executive James Mwangi that “the Board has passed a resolution withdrawing the proposed dividend recommendation and instead will be recommending to the shareholders that no dividend is paid for the financial year ended December 31, 2019.”
It added that after “careful consideration, the Board has resolved not to present the proposed dividend because the Board wishes to exercise financial prudence so as to conserve cash to enable the Company to respond appropriately to the unfolding crisis…”
This is the first time Kenya’s second-largest bank by assets has not paid dividends since listing on the Nairobi Securities Exchange (NSE) in August 2006. Equity is listed on the Nairobi Securities Exchange, cross-listed on the Uganda Stock Exchange and Rwanda Securities Exchange.
Uganda National Social Security Fund is one of the investors in Equity group. In 2015, the fund bought more stake at Equity Bank from London-based Helios EB Investors, becoming the single largest shareholder of the Kenyan lender.
The Group announced USD 211 million (798 billion Uganda shillings) in net profit in March and Mwangi said then that the performance points to success in the diversification of income streams as well as growing contribution of business outside Kenya.
Bank of Uganda and the Central Bank of Kenya had asked banks in the region not to pay dividends but retain the money to cover for loses as businesses and individuals default on their loans due to coronavirus.
The group advised “shareholders of the company and other investors are advised to exercise caution when dealing in the company’s ordinary shares on the Nairobi Securities Exchange, the Uganda Securities Exchange and Rwanda.”
Equity Group is one of the most profitable financial institutions in East Africa. Equity bank says it will not pay dividends
