StanChart’s Sh11bn dividend lifts share price at NSE
Standard Chartered Bank Kenya Chief Executive Officer Kariuki Ngari during the release of the 2023 Financial Results at their headquarters in Westlands, Nairobi on March 12, 2024. FILE PHOTO | LUCY WANJIRU | NMG
Standard Chartered Bank Kenya has raised its dividend payout by 32 percent to a record Sh29 per share amounting to Sh10.96 billion, raising its share price at the Nairobi bourse to levels last seen last April.
The rise in dividend pay from Sh22 per share totalling Sh8.31 billion paid earlier is on the back of the lender’s net profit for the financial year ended December 2023 increasing 15 percent to Sh13.8 billion from Sh12.1 billion.
The Tuesday morning announcement triggered a 5.7 percent rise in StanChart share price at the Nairobi Securities Exchange to close at Sh170.5 on Tuesday. The stock at some point touched a high of Sh180 in intraday trading.
StanChart had in December paid a Sh6 per share interim dividend and will pay the final dividend after its annual general meeting in May. The payout will mean StanChart has distributed 79.4 percent of its net profit to shareholders compared with 68.7 percent the year before.
The company's chief financial officer Chemutai Murgor said the lender does not have a dividend policy –which defines the portion of earnings to be distributed to shareholders— but noted that the decision is usually guided by the risk appetite. “We do have a capital risk appetite that is calibrated to allow us to retain enough to support our growth and any excess, we give it back to the shareholders,” said Ms Murgor in an interview with the Business Daily.
“For us, we don’t target to distribute a certain percentage of earnings. What we work with is our capital risk appetite which takes into account the minimum capital we require." StanChart posted a 32 percent rise in net interest income to Sh29.3 billion in the review period when loans and advances to customers grew 17 per cent to Sh163.16 billion. Non-interest income also rose by six percent to Sh12.4 billion, contributing to the 23 percent growth in the operating income.
“A double-digit growth in revenue is a very pleasing number to be able to deliver. It is about ensuring that we are sticking to the plan we agreed on,” said Kariuki Ngari, the chief executive at StanChart Kenya.
Operating expenses however grew 30.7 percent to Sh22 billion from Sh16.8 billion. StanChart attributed the rise to increased inflationary pressure on customers, depreciation of the shilling against major currencies and increases in targeted investments, especially towards digital services.
The lender raised provisions for loan defaults to Sh3.38 billion from Sh1.33 billion despite gross non-performing loans declining to Sh17.22 billion from Sh22.58 billion.
Staff costs went up from Sh7.88 billion to Sh6.79 billion to reflect pay rises while other operating expenses surged 27 percent to Sh8.88 billion as the lender booked losses on disposal of bond holdings.
Ms Murgor said the bank had some bonds earning 11 percent interest and had to dispose and deploy the money in higher interest-earning products such as one-year year treasury bills that are averaging nearly 17 percent currently.
