Companies

StanChart pays dividend despite posting decade-low profit

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A StanChart bank branch in Nairobi. PHOTO | NMG

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Summary

  • Standard Chartered Bank Kenya net profit for 2020 decline by 33.9 per cent to Sh5.44 billion.
  • The board has proposed a Sh10.50 dividend payout, being 16 per cent lower than the Sh12.50 that was paid out last year.

Standard Chartered Bank Kenya #ticker:SCBK shareholders are set for a dividend payout despite the lender’s full-year net profit declining by about a third on higher provisioning for loan defaults.

The tier I bank said Thursday morning that the board has proposed a Sh10.50 dividend payout, being 16 per cent lower than the Sh12.50 that was paid out last year.

The payout is despite the lender’s net profit for the financial year ending December 2020 declining 33.9 per cent to Sh5.44 billion from Sh8.24 billion posted a year earlier.

The current earnings are the lowest since 2010 when the Nairobi Securities Exchange-listed bank returned a net profit of Sh5.37 billion.

StanChart, which had last year proposed Sh15 per share final payout before halving it and softening this with a bonus issue of one share for every 10 held, now says the latest decision was supported by strong capital buffers.

“The board recognises the importance of dividends to shareholders and believes in balancing returns with investment to transform the business for the long-term, whilst at the same time preserving strong capital ratios,” said StanChart CEO Kariuki Ngari.

The profit dip was on account of relatively flat net interest income and 6.7 times rise in loan loss provision to Sh3.88 billion in appreciation of the economic challenges facing borrowers in a Covid-19 environment.

StanChart’s sharp rise in loan loss provisioning saw total operating costs rise by 21 per cent or Sh3.48 billion to Sh20 billion, piling pressure on the bottom-line.

The lender becomes the fourth to issue dividends despite a fall in profits, offering a boost to thousands of retail investors facing cash crunch since Covd-19 disruptions ushered in layoffs, business closures and freeze in hiring.

Co-operative Bank #ticker:COOP maintained its payout at Sh1 per share totaling Sh5.86 billion, while Stanbic #ticker:SBIC cut its payout by 46.2 per cent to Sh1.5 billion.

KCB #ticker:KCB declared a dividend of Sh1 per share or an aggregate of Sh3.2 billion, representing a 71.4 per cent drop from its normal payout of Sh3.5 per share.

However, Absa Bank #ticker:ABSA became the first tier I lender to declared it would not pay dividends this year due to economic uncertainty in the wake of the Covid-19 pandemic.