The share price of Standard Chartered Bank Kenya rose to touch a record high of Sh300 on Friday, buoyed by a strong earnings momentum and its policy of distributing excess capital as dividends to shareholders.
The bank’s share price had closed at Sh285.25 on Thursday before gaining 2.1 percent on Friday when it traded at an average of Sh291.25, taking its 52-week gain to 77 percent. It had reached highs of Sh300 in the trading session.
The rally has lifted the company’s market capitalisation to Sh110 billion.
The stock, which had declined to lows of Sh124 in early 2022 in the wake of the Covid-19 pandemic, has surged in recent months as investors react to the bank’s increased profitability and higher return on assets. Its current market value beats the previous peak seen in early 2015 when the stock traded at highs of Sh281 and the bank had a smaller volume of issued shares.
StanChart has led the general clamour for bank stocks, which have generous dividend payouts in an environment where returns on fixed income assets –bonds and Treasury bills— have dropped significantly in recent weeks as the Central Bank of Kenya (CBK) shifts its focus to promoting economic growth.
Other bank stocks that have gained in the rally include Absa Bank Kenya, Co-operative Bank of Kenya and I&M Group.
StanChart increased its per share dividend 31.8 percent to Sh29 for the year ended December 2023 compared to Sh22 a year earlier.
The bank also paid a record interim dividend of Sh8 per share for the half-year to June 2024, signalling that it is still pressing forward with incremental cash distributions to shareholders.
Its share price has shrunk its dividend yield to 9.9 percent from double digits previously.
StanChart grew its net income 62.7 percent in the nine months ended September, helped by higher income from lending and transactions.
The bank posted a net income of Sh15.8 billion in the period compared to Sh9.7 billion a year, marking the fastest pace of earnings growth among listed banks.
Total interest income rose 23.9 percent to Sh29 billion, benefitting from increased lending and investment in government debt securities in a higher interest rate environment.
The company’s loan book expanded from Sh143.5 billion to Sh151.2 billion in a period when the lending rate on most bank loans rose past the 20 percent mark amid successive monetary policy tightening actions from the CBK.
StanChart’s portfolio of T-bills and bonds also increased by Sh11.7 billion to Sh65.3 billion when the returns on these securities rose to double digits.
Non-interest income, including fees and commissions, surged 73.5 percent to Sh14.2, supporting the income from lending activities.
The bank’s bottom-line also benefitted from a modest rise in costs compared to the increase in revenue from transactions and loans.
