Stanbic Bank has doubled its interim dividend to Sh3.80 per share for the half year ended June 2025, a move the lender said is aimed at deploying idle capital and bolstering profitability, despite a 9.3percent dip in its net profit to Sh6.5 billion.
The dividend announced for the six months ended June 2025 translates to a total pay-out to shareholders of Sh1.5 billion, up from Sh726.8 million in the same period in 2024.
“The more capital we hold, the more it is a drag on our earnings and profitability. We have a minimum capital threshold, which we have set for ourselves in line with Central Bank. In addition to that, we have another 200 basis points buffer and that gives us enough capital,” Joshua Oigara, the CEO of Stanbic Kenya and South Sudan, said on Thursday.
“Anything beyond that is really nice to have but not a must to have. So, we are also being very efficient about how we are handling our capital.”
The bank’s core capital to total risk weighted assets increased to 15.2 percent from 13.5 percent, staying above the statutory requirement of 10.5 percent and translating into an enhanced capital base. Core capital to risk weighted assets is a gauge used to asses a bank’s financial soundness, stability and ability to protect depositors and shareholders from emerging shocks.
Despite the dividend sweetener, the bank faced a marginal 3.6 percent decline in its total income to Sh19.1 billion, with a notable hit from a 58.2 percent decline in foreign exchange trading income, which closed the period under review at Sh1.9 billion.
The drastic decline in foreign exchange trading income comes on the back of a largely stable shilling against major currencies including the US dollar, which has remained flat at 129 units, limiting opportunities for high margins as was witnessed in 2023 and early 2024.
“The environment has dramatically shifted in the foreign exchange market. The entry point from margins is gone and the industry must now move from the spreads game. What we are building now is a volumes business there because now we are in a low margins environment and what we must do is push market share. We have increased our volumes in the foreign exchange business this half year by 25 percent and that’s one thing we are doing extremely well,” Mr Oigara said.
Stanbic Bank also aggressively cut on its fixed deposit holdings in a bid to ease the pressure faced through interest expense on expensive deposits.
The bank’s interest expense on customer deposits declined by a staggering 45.3 percent to Sh5.9 billion in the period under review with the deposit book declining by 2.5 percent to Sh346.9 billion.
“Thankfully, we have been able to claw back on our previously high expenditure on interest. We are not going to grow our liabilities just for the sake of it and that’s why our Net Interest Margins are up 40.0 basis points. Today our fixed deposits are down by Sh50 billion and that means we have literally halved our concentration there,” Mr Oigara said.
