Banks slash dividend payouts by Sh5.5bn despite super profits

Shareholders in banks have not benefited from the industry’s super profits last year after the lenders slashed their dividends by Sh5.5 billion.

The Central Bank of Kenya (CBK) data show that bank owners have received dividends estimated at Sh15.8 billion, down from Sh21.3 billion lenders paid last year — the lowest payout since 2011.

Commercial banks rode on high lending rates to post another year of record profits, despite persistent calls for deeper interest cuts to reflect the real cost of money.

The lenders’ profit before tax grew by Sh15.3 billion (12. 2 per cent) to Sh141 billion and analysts had forecast lower dividends as most banks were expected to retain more profits to boost their capital levels.

“The growth in profitability was largely supported by the growth in the credit portfolio,” said the CBK.

The dividend cuts happened in mid and bottom-tier lenders because the industry top dogs such as Equity, KCB, Co-operative Bank, Standard Chartered and Barclays increased or left their payouts unchanged.

Standard Chartered raised its dividends to Sh17 per share from Sh14.50, Equity from Sh1.50 to Sh1.80 while KCB and Co-operative Bank did not change their payouts.

Banks have since last month been paying dividends which have dropped from Sh22.6 billion.

This has seen banks boost their reserves to Sh252 billion in December from Sh132 billion in 2011 – funds that could be used for expansions and to bolster their capital levels.