Standard Chartered Bank Kenya is set to pay a record dividend of Sh7.1 billion on ordinary shares for the year ended December.
The company declared a final dividend of Sh14 per share, having already made an interim distribution of Sh5 per share.
The higher payout comes as the bank’s net income rose by two-thirds to Sh9 billion in the review period from Sh5.4 billion a year earlier.
Standard Chartered Bank Kenya #ticker:SCBK is set to pay a record dividend of Sh7.1 billion on ordinary shares for the year ended December when its net income surged on lower expenses and higher non-interest income.
The company declared a final dividend of Sh14 per share, having already made an interim distribution of Sh5 per share.
This will bring the total payout to Sh19 per share or Sh7.1 billion, representing an 81 percent increase from the previous year’s Sh3.9 billion or Sh10.5 per share.
The higher payout comes as the bank’s net income rose by two-thirds to Sh9 billion in the review period from Sh5.4 billion a year earlier.
StanChart says the improved profitability has put it in a position to pay the larger dividend –the most generous in the banking industry at nearly 80 percent of net earnings— while remaining well-capitalised to pursue growth.
"The board is very clear that we want to make sure the business will retain enough capital and we don’t need to hold anything in excess," chief executive Kariuki Ngari said.
"If when we don’t need the capital, you give it back to shareholders and that remains. We are operating on regulatory requirement ratio and a buffer we give ourselves to make sure if there any shocks we are able to absorb them and we don’t want to come back and ask for shareholders for additional capital."
He added that short-term risks such as rising inflation, the Russian invasion of Ukraine, and the August general election could cause a temporary slowdown in credit demand and investment.
The bank’s profit growth was driven by lower costs and higher non-interest income. Loan loss provision reduced by Sh1.8 billion to Sh2 billion, contributing to operating expenses shrinking 17.2 percent to Sh16.5 billion.
"Loan loss provision reduced as we worked closely with our clients to support them manage through the pandemic," Mr Ngari said.
Non-interest income including fees rose by a quarter to Sh10.3 billion. Total interest income, however, shrunk by Sh1.4 billion to Sh22.2 billion as the bank reduced its investment in government debt securities.
The loan book grew 3.6 percent to Sh125.9 billion. Stanchart’s announcement is a signal that bank investors are on course to book major dividend earnings, having suffered reduced payouts in the 2019 and 2020 financial years when most lenders moved to conserve cash in the midst of the uncertainty brought by the Covid-19 pandemic.
Over the two years, bank dividends fell by more than Sh30 billion compared to the peak payout of Sh40.5 billion in 2018 among lenders listed on the Nairobi Securities Exchange (NSE).
Stanchart joins Stanbic Holdings to announce larger profits and dividends for the year ended December, a trend that is expected to continue as rival banks also announce their results in the coming days.
Stanbic more than doubled its dividend payout for the review period to Sh9 per share or a total of Sh4.2 billion.
The lender had paid a dividend of Sh3.8 per share or an aggregate of Sh1.8 billion for the prior financial year.
Stanbic had already paid an interim dividend of Sh1.7 per share and has proposed a final payout of Sh7.3 per share to investors who will be on the May 20 register. The larger dividend comes after the bank’s net income jumped 38.8 percent to Sh7.2 billion on reduced loan impairment and higher interest income.
