Site icon MONEYINAFRICA

Equity halts Sh9 billion dividend on Corona fears

Equity halts Sh9 billion dividend on Corona fears

Customers at an Equity Branch in Nairobi. FILE PHOTO | NMG Equity Group #ticker:EQTY has cancelled its proposed dividend payout of Sh2.50 per share or a total of Sh9.4 billion, citing the need to conserve cash in the wake of the global Covid-19 pandemic.

This is the first time the country’s second-largest bank by assets has skipped dividends since listing on the Nairobi Securities Exchange (NSE) in August 2006. It becomes the latest big bank to hold or postpone cash distributions to shareholders after the NCBA Group #ticker:NCBA and the Standard Chartered Bank Kenya #ticker:SCBK.

Equity, which has restructured Sh92 billion or 25.1 percent of its loan book due to the pandemic’s effects on the economy, says the proposed dividend was announced during better times and now needs to be shelved.

“Accordingly, 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 31st December, 2019,” Equity said in a statement. “Therefore, the 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 the Rwanda Stock Exchange.”

The bank was scheduled to pay the dividend on July 24 to shareholders on record as of June 12.

Besides the pressure on its balance sheet brought by government measures to slow down the spread of coronavirus, Equity’s need to conserve cash is also motivated by its commitment to spend Sh10 billion to acquire a 66.5 percent stake in DRC-based Banque Commerciale du Congo.

The bank’s move Monday distinguished it as the country’s largest lender to skip dividends in recent history. In contrast, Co-op Bank #ticker:COOP demonstrated its confidence by bringing forward its Sh1 per share or Sh5.8 billion dividend, which was paid on April 23.

KCB Group #ticker:KCB is also progressing with the payout of its final dividend of Sh2.50 per share or an aggregate of Sh8 billion on or before July 3.

“Dear shareholder, please register to participate in the KCB Group AGM … You can also choose to receive future dividends via mobile money during the registration,” the lender’s shares administrator, Image Registrars, said in a communication to investors on Monday.

KCB has not withdrawn its proposed dividend, which is among the agenda items to be voted on at the meeting. StanChart could join Equity and NCBA among the lenders that […]

Stay in the Know!

Sign up for the latest news and information on African Companies and Economy.

By signing up, you agree to receive MoneyInAfrica offers, promotions and other commercial messages. You may unsubscribe at any time.
Exit mobile version