The nine Kenyan banks listed on the Nairobi Securities Exchange (NSE) retained a record Sh105.3 billion of the profits they made in the year ended December despite declaring all-time high dividend distributions to shareholders.
This amounts to a profit retention rate of 62.5 percent which will fuel their earnings going forward through reinvestments including expansion and acquisitions which the large players have become fond of.
The mix of record payouts and profit retention demonstrates the earnings boom in the banking sector which was aided by a surge in non-funded income and interest income amid increased lending and foreign exchange trades.
An analysis of the banks’ profitability and dividend actions, which excludes Bank of Kigali and HF Group, shows that the lenders will pay out a total Sh63.1 billion for the review period including interim distributions disbursed earlier.
KCB, DTB, I&M and Equity were among the listed lenders that retained most of their profits.
KCB declared 18.5 percent or Sh6.4 billion (Sh2 per share) out of its net earnings as dividend to shareholders and kept 81.5 percent equivalent to Sh34.4 billion.
It had the lowest distribution ratio and also stood out as the bank that cut its dividend while the others announced record payouts. The dividend was cut from Sh3 per share or Sh9.6 billion in the prior year.
The bank’s net profit grew 19.5 percent to Sh40.8 billion in the review period.
DTB grew its net income 55 percent to Sh6 billion and declared a distribution of 23 percent or Sh1.39 billion (Sh5 per share) as enhanced dividends while retaining Sh4.6 billion or 76.9 percent in the year under review. The dividend rose from Sh838.8 million or Sh3 per share in the prior year.
I&M posted a 37.7 percent increase in net profit to Sh11.2 billion and raised its dividend to Sh3.7 billion (Sh2.25 per share), keeping Sh7.5 billion.
This amounts to a distribution of a third of the net income despite the dividend rising from Sh1.5 per share (Sh2.4 billion) in 2021.
Equity, the most profitable lender, grew its net income 14.6 percent to Sh44.8 billion and declared a higher dividend of Sh4 per share (Sh15.1 billion) in the review period.
The new dividend amounts to a payout of 33.6 percent of net profit, rising from 28.8 percent or Sh3 per share (Sh11.3 billion) declared the year before.
Equity retained Sh29.8 billion or 66.4 percent of the net profit recorded in the review period.
Standard Chartered Bank Kenya was the most generous, distributing 68.9 percent of the Sh12 billion net income. This amounts to a payout of Sh22 per share (Sh8.3 billion), with the lender transferring Sh3.7 billion to retained earnings.
NCBA Group, Absa Bank Kenya and Stanbic followed StanChart, distributing more than half of their net income while also beefing up their balance sheets with the retained profits.
