The decision follows BoU’s directive to support cash flow in the economy Kampala, Uganda | ISAAC KHISA | Stanbic Uganda Holdings Ltd (SUHL) has cancelled its proposed dividend payout of Shs 5.06 per share or a total of Shs110bn to its shareholders, citing central bank’s decision to decline to the request over coronavirus pandemic fears.
This is the first time that the country’s largest bank both in assets and profitability has skipped dividend payout to its shareholders since listing on the Uganda Securities Exchange in 2007.
Japheth Katto, the chairman Board of Directors Stanbic Uganda Holdings Ltd said no dividend for the period ended December 31st, 2019 will be recommended to SUHL shareholders for approval at the Annual General Meeting slated for July.17.
“Further to the communication of April15, 2020 regarding the Bank of Uganda (BOU) directive to Supervised Financial Institutions (SFIs) to defer the payment of all discretionary distributions including dividends, shareholders are advised that BOU declined a request by Stanbic Bank Uganda Limited for an exception,” he said.
“The Board recognises the importance of dividends to shareholders but must comply with the regulatory directive currently in place to ensure business continuity in the short, medium and long term.”
Katto, however, said the bank subsidiary, which started offering loan a payment holiday of up to 90 days three months ago, remains liquid and well capitalised with sufficient buffers well above the regulatory requirements.
This new development signals that other commercial banks and financial institution including dfcu and Bank of Baroda will not be on position to pay dividends to its shareholders.
Beyond Uganda, Equity and NCBA Group, which have operations across the East African region with inclusion of Uganda have also cancelled dividend payment to their shareholders.
On the contrary, KCB Group said it is progressing with the payout of its final dividend of Kshs 2.50 per share or a total of Kshs 8 billion.
The Bank of Uganda on March. 24 this year suspended all financial institutions under its supervision from paying dividends and bonuses to their shareholders as it seeks to reserve enough capital to the economy.
Dr. Tumubweinee Twinemanzi, executive director supervision at the BoU said it was important that banks and such other firms defer the payment of dividends and bonuses until further notice.“Capital reservation to support the real economy and absorbed losses should take priority over discretionary distributions like dividend [and] bonus payments. Therefore all payments of discretionary distributions is deferred until further […]
