Stanbic joins Stanchart in skipping dividend pay

A Stanbic Bank branch on Kimathi Street, Nairobi. FILE PHOTO | NMG

Stanbic Holdings has opted not to pay shareholders an interim dividend for the six months ended June despite recording a 36.95 percent jump in net profit to Sh4.79 billion.

The skipping of dividends signals the banking sector’s concerns about the economy which is facing multiple challenges such as high inflation, a weakening shilling, and political uncertainty following the disputed presidential election results.

Stanbic had paid an interim dividend of Sh1.70 per share in the first half of 2021 and followed it with a final payout of Sh7.3 per share for the year ended December 2021.

A top executive of the Nairobi Securities Exchange-listed lender told the Business Daily on Thursday the lender opted to conserve the cash in the review period to strengthen its balance sheets at a time it is seeking to increase its lending to businesses this year.

“Our investors expect a return on the investment …. if you look at two months we paid 50 percent of the income we made in 2021 so we are not averse to paying dividends, however when we are making dividends’ decisions, especially the timing thereof, there is a question of can we continue sustaining the growth that we want to see,” Stanbic Bank Kenya’s head of finance Dennis Musau said.

“If you look at our 31 percent loan book growth and prospects that we could even grow that further, it’s only fair to continue financing that growth and actually increasing the return for our shareholders.”

Stanbic joins tier one lender Standard Chartered Bank Kenya which also opted not to pay shareholders an interim dividend for the six months ended June despite recording a 10.9 percent jump in net profit to Sh5.41 billion.

Stanchart had been making interim cash distributions to shareholders at a rate of Sh5 per share. The bank indicated that it skipped dividends due to economic uncertainty.

The payout austerity by the two lenders points to a dry season for shareholders to whom dividends are a vital source of income.

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