CfC Stanbic triples dividend payout after 10.9pc profit rise

CfC Stanbic Holdings has nearly tripled its dividend payout following a 10.9 per cent increase in net profit for the full-year ended 2014 driven by sharp growth in interest income.

The holding company, which owns CfC Stanbic Bank and its stockbrokerage outfit SBG Securities, reported a profit after tax of Sh5.6 billion up from Sh5.1 billion a year earlier.

The company said it will be paying a total dividend of Sh6.15 per share compared to the Sh2.15 paid to its shareholders last year.

“The directors have recommended a final dividend of Sh5.20 having paid an interim dividend of Sh0.95,” said the bank’s chairman, Fred Ojiambo, in a statement.

It’s banking business, CfC Stanbic, recorded net profit of Sh5.4 billion up from Sh4.9 billion. The growth was attributed to 11.6 per cent increase in interest income after it grew its loan book to Sh88.3 billion from Sh69.1 billion.

Analysts had predicted a drop in dividend payout by banks which are expected to hold higher capital adequacy ratios beginning this year.
Customer savings with the bank rose marginally to Sh96.8 billion from Sh95.7 billion.

CfC Stanbic operates a branch in South Sudan, which it is in the process of converting into a subsidiary.

“South Sudan business impacted the general performance, despite a nine per cent contribution in the overall business,” said Dyer and Blair Investment Bank.

READ: CFC Stanbic posts Sh5.6bn net profit for 2014

The lender’s non-performing loans edged up by Sh1.2 billion to Sh3.3 billion arising majorly from the corporate and investment banking segment of its business. Its loan loss provisions however dropped to Sh803 million from Sh854 a year earlier.

Non-interest income decreased by three per cent on account of a drop in foreign exchange trading earnings which fell by 22 per cent to Sh2.8 billion.

Operating expenses went up marginally to Sh8.9 billion from Sh8.7 billion mainly driven by a growth in staff costs.

The stockbrokerage unit recorded a 26 per cent profit growth to Sh237 million from Sh188 million in 2013. Profit growth was largely driven by higher brokerage commission attributable to increased investor trading.

SBG Securities also recorded capital gains from sale of investments of Sh54.9 million compared to Sh32.4 million a year earlier.

Despite the dividend announcement and profit growth the company’s share price at the Nairobi Securities Exchange on Thursday fell to Sh132 a unit from the previous day’s Sh139 a share.

“CfC Stanbic under-performed our estimates as its corporate and investment banking arm performed poorly,” said Standard Investment Bank in a note to investors.

The bank plans to open four new branches in Nairobi and the coast region which analysts at Dyer and Blair said would widen its personal and business banking customer base.

CfC issued a Sh4 billion corporate bond last year to fund its expansion plans.