Mr Lamin Manjang, Standard Chartered Kenya chief executive officer. PHOTO | FILE
What you need to know:
StanChart's stock is currently trading at Sh302 a share, making it the most priced bank counter and out of reach of many retail investors.
The bank had the second lowest turnover among the top 20 largest companies at the bourse in the first six months of the year.
Standard Chartered Kenya has forwarded a share split proposal to its parent company in response to shareholder complaints about the poor liquidity on the counter.
The bank’s stock is currently trading at Sh302 a share, making it the most priced bank counter and out of reach of many retail investors.
“We have discussed it at the board level and escalated it to majority shareholders because it is one of the issues that came up at the annual general meeting. It is being discussed,” said chief executive Lamin Manjang.
A share split increases the number of shares of a company by dividing a stock while maintaining its market capitalisation. It often increases trades and prices in Kenya.
Data from the Nairobi Securities Exchange shows the bank had the second lowest turnover among the top 20 largest companies at the bourse in the first six months of the year. Cross-listed Ugandan power firm Umeme. had a lower turnover.
But despite the low turnover Stanchart was ranked the third most attractive banking counter at the bourse in a report released on Monday by investment firm, Cytonn.
Its majority shareholder, Standard Chartered Plc, hogs 74 per cent of the shares in the local unit, underlining the importance of it approving the split proposal.
StanChart’s share price has shrunk 13.6 per cent in the last three months following a trend among the banking counters.
The low volume of free floating shares has been cited by analysts as a hindrance to the price discovery of the counter.
Barclays Bank is the last lender to have conducted a share split, done when the stock was trading at Sh67 a unit in 2011 in the ratio of four for each held.
Equity Bank split its share 10 times five years ago when it was trading at Sh125 a share.
Stanchart is currently in the process of cleaning up its loan book following a jump in non-performing debt last year. Mr Manjang said the bad book had dropped to seven per cent of its total loans in May from 11 per cent at the end of last year.
The jump in bad loans was one of the factors leading to a slump in the banks’ profitability by 30 per cent in the first quarter of the year.
The bank also hopes to reap from a restructuring process conducted last year and booking of new loans especially to small and medium sized enterprises (SMEs).
The lender has also diversified its revenue streams with entry into bancassurance business.
It joins lenders such as Barclays, I&M, KCB, Equity and NIC who are in the insurance business.
KCB said it earned Sh155.2 million pre-tax profit from its bancassurance unit last year, its first full year of operation, underlining the income stream open to Standard Chartered.
Equity Insurance Agency posted a pretax profit of Sh396 million while NIC recorded Sh26.3 million.
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