Equity Group #ticker:EQTY is set to pay Sh50 million to its outgoing chairman, Peter Munga, in recognition of his long service to the lender, which has recorded one of the biggest commercial successes in the country.
It is the largest ever publicly-disclosed exit compensation to a chairman of a Nairobi Securities Exchange (NSE) listed company.
Mr Munga, who will not seek re-election at the bank’s annual general meeting at the end of this month, will be replaced by David Ansell.
“Payment of a one-off gratuity of Sh50 million to the outgoing founder and chairman, Peter Kahara Munga, in consideration of his length of service, commitment and dedication to the company which spans over 35 years,” reads one of the special resolutions to be voted on at the shareholders’ meeting.
Mr Munga is among the founders of the lender that started out as a building society in 1984 before converting to a bank in 2004, entering an industry that it revolutionised with zero-balance accounts for retail customers.
Long-term investors in the bank have recorded some of the largest returns on the NSE as the company profitably grew its customer base and diversified into corporate banking besides venturing into the regional market.
Equity listed on the NSE in 2006 with a value of Sh6.3 billion and now has a market capitalisation of Sh158 billion, representing a capital growth of 25 times.
The bank now has 3.7 billion shares following a 10:1 split in 2009 and the creation of nearly 200 million shares in 2007 for issuance as bonus shares.
The share splits and bonus shares have seen the volume of Equity’s issued shares rise 41.6 times from 90.5 million units prior to its listing.
Equity in 2015 made a rare move to issue 70.8 million of its shares in acquiring a majority stake in Democratic Republic of Congo’s ProCredit Bank whose owners ended up with a 1.8 percent stake in the Kenyan banking multinational.
The lender’s cumulative dividend payouts since the listing stand at Sh57 billion, the equivalent of the current market value of cigarette manufacturer BAT Kenya.
The performance turned scores of investors into billionaires, including the bank’s chief executive, James Mwangi, the family of late businessman Nelson Muguku, Simon Thuo and Franklin Ndii.
Equity’s Sh19.6 billion net profit in the year ended December was 26 times the Sh753.3 million it made in 2006, its first year as a publicly-traded company.
The lender, alongside KCB Group, has consistently ranked as the country’s most efficient bank with a return on equity (RoE) of more than 20 percent.
Its performance, anchored on its retail banking success, has attracted major global investors, including London-based asset manager BlackRock Frontiers Investment Trust Plc.
“Kenyan lender, Equity Bank (up 19 percent), rounds out the month’s top contributors,” BlackRock, which holds shares worth more than Sh1 billion in the bank, said in a review of its January portfolio.
Equity has in recent years moved to strengthen its existing regional operations, postponing entry into new markets.