Top bank owners earn billions in dividend payouts

Top shareholders of commercial banks are set to earn billions of shillings in dividends following yet another year of double-digit profit growth for the industry.

The Treasury, private equity group Helios and parent companies of multinational banks also stand to earn significant amounts of dividends going by payouts announced so far for the year ended December 2013.

Kenyan banks’ total pre-tax profit jumped 15.4 per cent to Sh124.5 billion last year, a slower growth rate compared to 20.6 per cent in 2012 — which was attributed to increased non-performing loans and the need to aside additional cash as provision for defaults.

The lower pace of growth did not however dampen the party for billionaire investors with significant banks stakes, as lenders such as CfC Stanbic tripled their dividend pay to Sh2.15 a share while Equity raised its pay-out by a fifth to Sh1.50.

Among the top dividend earners of NSE-listed banks is Equity Bank chief executive James Mwangi who is set to pocket Sh271 million.

Mr Mwangi’s overall holding at Equity is 4.88 per cent — directly and indirectly through Britam and the bank’s Employee Share Ownership Plan.

This values his stake in the bank at Sh5.7 billion, based on the stock’s closing price at the Nairobi bourse Tuesday, making him one of Kenya’s wealthiest CEOs.

Also on the list of super dividend earners is the family of the late Central Bank of Kenya governor Phillip Ndegwa, which is set to take home Sh135.6 million from their 25.25 stake at NIC Bank.

The mid-tier lender kept total dividend pay-out at Sh1 a share. The Ndegwa family holds the 135.6 million shares through its affiliates First Chartered Securities Limited and ICEA Asset Management.

Former Finance Minister Njeru Githae in 2012 allowed the Ndegwa family to temporarily take up to a maximum of 35 per cent of NIC Bank in a rights issue —which is above the set limit of 25 per cent.

Other major beneficiaries of the dividend boom include Equity Bank chairman Peter Munga who will pocket Sh8.8 million, Britam CEO Benson Wairegi who will earn Sh13.6 million from his 0.25 per cent stake in the lender, and the family of the late Nelson Muguku (Sh59.9 million).

Businessman Paul Wanderi Ndung’u is set to receive Sh4.3 million in dividends from mortgage financier Housing Finance which increased total dividend pay by a quarter to Sh1.75 per share last year up from Sh1.40 paid in 2012.

The dividend windfall season will also mint billions for pension schemes and insurance firms. Barclays Bank Plc will earn Sh2.6 billion from the 68.5 per cent majority holding in Barclays Bank of Kenya, which is a drop from the Sh3.7 billion the London-based multinational pocketed in 2012.

Barclays Kenya cut dividend pay-out by a third to Sh0.70 last year from Sh1.00 in 2012 after the lender announced a 12.7 per cent drop in full-year profit, weakened by high costs and a one-off staff restructuring cost of Sh788 million.

CfC Stanbic’s dividend pay will be a boon for South Africa’s Standard Bank, which owns 60 per cent of CfC Stanbic and stands to rake in Sh509.9 million in dividend earnings.

Private equity firm Helios EB stands to earn Sh1.3 billion worth of dividends from its 24.45 per cent stake in Equity Bank. The London-based PE fund in 2007 invested Sh11 billion in Equity Bank to become the largest shareholder in the lender.

The stake is now worth Sh28.7 billion and Helios has earned a total of Sh4.7 billion in dividends since 2008, meaning its investment has grown three-fold.

Britam will harvest Sh425.5 million in dividends from its ownership of 7.66 per cent of Equity Bank.  Britam CEO Benson Wairegi serves as a non-executive director at Equity.

Britam has made a further Sh35.7 million in dividend earnings from the 8.85 per cent shareholding in Housing Finance.

Equity Bank will also rake in Sh100.2 million as it owns 24.84 per cent of Housing Finance. The higher dividend pay-out will be a boon for the Treasury, which has stakes in KCB (17.63 per cent), Housing Finance (3.65 per cent) and 1.1 per cent at CfC Stanbic – earning taxpayers Sh1.04 billion, Sh14.7 million and Sh9.3 million respectively.

KCB increased dividend pay-out by Sh0.10 to Sh2.00 last year. This helped increase total dividend earnings for the Treasury to Sh1.1billion. The government stands to earn more from National Bank, which is yet to release full year results.

The National Social Security Fund has earned dividend income totalling Sh501.8 million from its shareholding in KCB, Housing Finance and Barclays.

“New capital requirements forced banks to retain more earnings in 2013 than in the previous year, technically paying lower dividends when calculated as percentage of profit,” said Francis Mwangi, head of research at Standard Investment Bank.