KCB set to pay Sh654m as Treasury reaps from shares

Kenya Commercial Bank is today expected to pay a dividend cheque for Sh654 million to the Treasury, which owns a 17.75 per cent stake in the country’s biggest lender by assets.

Treasury’s dividend will be higher than the Sh524 million it earned last year on near-double growth in profit, which stood at Sh8.8 billion in 2010.

Treasury will also receive a dividend of Sh126 million for its 60 per cent equity in Kenya Re and another from the Capital Markets Authority.

The bank’s payment is the second-biggest after National Bank’s Sh712 million in dividends for 2010, both expected to ease the pressure on the budget deficit as tax collections experience shortfalls. “Last year was a very good period and we are looking forward to earning a record dividend as the banks in which the State has stakes in performed well,” said Ms Beatrice Gathirwa, the director of finance at the Treasury in a recent interview.

The bank is in the middle of a staff restructuring exercise that has seen the exit of 17 executives, while more senior and middle level managers are slated to leave as it seeks to contain its staff costs that have slowed its profit growth. The state provident fund National Social Security Fund is expected to earn about Sh280 million for its 7.75 per cent stake in KCB, after shareholders approved a Sh1.25 dividend a share last month.

Central Bank of Kenya governor Njuguna Ndung’u has termed 2010 as a good year for the banking sector, in which net profits jumped by more than half on average to Sh80 billion. Development Bank completes the top three financial institutions that the government has a stake in, with a Sh312 million dividend payment, taking the tally of dividend payment from banks to Sh1.7 billion.

The State’s minority shareholding in mortgage company Housing Finance and CFC Stanbic Holdings is expected to earn it a total of nearly Sh10 million.