The families of Jomo Kenyatta and Philip Ndegwa as well as the CEOs of Equity Group #ticker: and Co-operative Bank are set to earn dividends of Sh1.1 billion cumulatively, based on the payouts proposed by the banks they have invested in.
The Kenyattas and Ndegwas are major shareholders in NCBA Group, which was formed from the merger of the NIC Group and CBA Group last September. On the other hand, Equity Group CEO James Mwangi and Gideon Muriuki of Co-op Bank own significant stakes in the banks they lead, priming them for significant dividend payouts.
Co-op Bank maintained its dividend for the year ended December 2019 at Sh1 per share while NCBA raised theirs from Sh1.25 to Sh1.75. Equity Group, on the other hand, raised its payment from Sh2 to Sh2.50 per share.
As a result, Dr Mwangi, who owns a five percent stake in Equity, will cement his position as the biggest individual dividend earner with a payout of Sh471.7 million.
This amount is higher than the annual net earnings of 34 NSE-listed firms including Unga Group and CIC Insurance, underlining the impact of Equity’s profitability and the size of Dr Mwangi’s stake in the bank.
His 188.6 million shares in Equity currently have a market value of about Sh6 billion, marking one of the single largest investments in a publicly-traded firm by an individual.
The Kenyatta family is second with a dividend of Sh296.5 million from their 13.2 percent interest in NCBA. This is the first time they will get a dividend from the merged bank. The Ndegwa family is third with a payout of Sh263.9 million on their 11.75 percent stake in the same lender.
Prior to the tie-up, the former NIC Group paid an interim dividend of Sh0.25 for the half year ended June 2019. As separate entities, NIC paid a total of Sh879.9 million for the year ended December 2018 while CBA made a distribution of Sh1.6 billion.
The merged lender is now expected to be paying a total of at least Sh1.75 per share going forward, a move that will lift the Kenyattas’ income to Sh345.9 million and that of the Ndegwas to Sh307.9 million.
While NCBA’s dividend per share represents an increase of 40 percent, it is a rise of Sh75.6 million in absolute terms.
Mr James Ndegwa, NCBA’s chairman, last year told shareholders that NCBA would maintain a conservative dividend payment policy of distributing about a fifth of net earnings to shareholders.
He said NIC had grown over the years because of consistently reinvesting most of its earnings, and that former shareholders of CBA were agreeable to the strategy.
At Sh1.75 per share, the new payout represents a 16.2 percent drop in earnings for former CBA owners compared to the income equivalent of Sh2.09 per share that they received for the year ended December 2018.
For former shareholders of NIC, however, it amounts to a 40 percent jump in earnings from the previous payout of Sh1.25 per share.
NCBA has risen to rank as the sixth largest lender in Kenya in terms of absolute profits after overtaking Absa Bank Kenya and DTB Group.
It reported a net profit of Sh7.8 billion in the year ended December – the first time it published its results as a combined entity. Absa’s and DTB’s net earnings stood at Sh7.4 billion and Sh6.7 billion respectively in the review period.
However, Absa had a one-off rebrand and separation cost of Sh1.5 billion, which significantly ate into its earnings.
KCB Group, the country’s biggest bank by assets, reported the largest net income of Sh25.1 billion, followed by Equity Group (Sh22.3 billion), Co-op Bank (Sh14.3 billion), I&M Holdings (Sh10.3 billion) and StanChart Kenya (Sh8.2 billion).
Co-op Bank retained its dividend at Sh1 per share in the review period, a move that will see Mr Muriuki earn Sh117.4 million from his two percent stake in the lender.
Mr Muriuki’s remuneration is the highest in corporate Kenya, with Co-op Bank saying it rewards his role in growing the lender, which was in deep losses prior to his appointment. Mr Muriuki, who was hired in March 2001, reported the lender’s first net profit of Sh164.7 million in 2002.