Small banks shareholders’ miss out on dividends

A cashier counts dollars and shillings/ Hefty profits by big banks has left shareholders smiling all the way to the bank, but this is not the same to those who invested in small banks.

"Smiley shareholders," a Twitter user, @DollyOgutu, tweeted following the huge profit and dividend pay-outs announced by the big boys.

Banks that had cut or frozen payouts have now increased or revived dividend payment, while those that maintained them in the pandemic are expected to continue, says Ogutu.

Equity Group is set to pay shareholders a record dividend of Sh11.3 billion at Sh3 per share for the year ended December 2021, as net profit nearly doubled to Sh39.1 billion.

KCB board on the other hand has recommended a final dividend of Sh2 per share which will amount to Sh6.43 billion.

Co-operative Bank which continued with dividend payment despite the pandemic is paying Sh1 per share, totalling Sh 5.9 billion.

However, shareholders in tier 2 and tier 3 banks continue to miss out on returns on investment, as most of the lenders report low profits amid high operating expenses.

They are yet to shake off the Covid-19 pandemic impact, among them high loan defaults.

Bank of India, a tier-three bank, will not pay dividends despite its profit after tax for the year ended December 2021, increasing 26 per cent to Sh2.9 billion, from Sh2.3 billion.

Its loan book increased to Sh15.5 billion from Sh14.2 billion, while customer deposits rose to Sh52.6 billion, compared to Sh48.8 billion the previous year.

The lender reduced its loan loss provision to Sh243.9 million from Sh408.8 million, reducing concerns of customer defaultsDuring the year, its total non-performing loans shrunk to Sh622.5 million from Sh988 million.Tier three lender Victoria Commercial Bank has reported an 8.9 per cent drop in profit after tax for the year ended December 31, as it remained holding government securities (available for sale) totalling Sh5.9 billion.Its profit totalled Sh466.5 million, a drop from Sh511.9 million the previous year.The lender saw NPLs balloon to Sh4.1 billion up from Sh1.5 billion as it pushed up its loan loss provision by Sh900 million to Sh2.1 billion.Sidian Bank, despite a significant jump in profit after tax, from Sh18.8 million to Sh486.2 million, has not recommended dividend payment.During the year under review, total interest income increased to Sh3.5 billion from sh2.4 billion.Operating expenses however wiped out some of the gains after rising to Sh2.5 billion from Sh2.1 billion, mainly loan loss provision of Sh475.5 […]

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