Capital Markets

Dividend drought jitters as inflation hits economy hard


Nairobi Securities Exchange trading floor. PHOTO | NMG

Uncertainty over dividend payouts by listed financial firms at the Nairobi Securities Exchange (NSE) is rearing up again on concerns about the impact of high inflation on the economy.

Banking, manufacturing and insurance companies have largely refrained from offering investors interim dividends in the half year to June, despite profits generally going up in the post-Covid period.

It was anticipated that after the economic recovery from the impact of the Covid-19 scourge, companies would loosen their grip on dividends, which they had withheld as they built up capital buffers during the pandemic.

Out of the 10 local listed lenders, only two –NCBA and Absa Kenya— paid their shareholders an interim dividend for the six months to June, while perennial payers Standard Chartered Kenya and Stanbic Kenya opted against the reward this year.

Among the six listed insurers, only Jubilee Holdings paid an interim dividend, maintaining its Sh1 per share payout that it had also made in the half year period in 2021.

StanChart, which led the banking sector with the highest dividend payout ratio of 79.3 percent or Sh19 per share in the year ended December, has been paying interim dividends since 2016, only skipping 2020 due to capital preservations measures instituted during the Covid-19 pandemic.

The lender, however, opted not to reward shareholders with an interim dividend this year, despite recording a 10.9 percent jump in net profit to Sh5.41 billion.

[email protected]