Kenya:Top bank owners set for dividend windfall

Wealthy owners of public listed banks are set to earn billions in dividends this year, even as their customers continue to face difficulties accessing credit following the coming into force of a law capping interest rates last year.

Nine out of the 11 listed banks that have announced 2016 financial results collectively posted a 13 per cent rise in total dividend payout totalling Sh34.7 billion compared to Sh30.8 billion in 2015.

Top in the list of those expecting millions of shillings in dividends are bank executives James Mwangi (Equity Bank) and Gideon Muriuki of Co-operative Bank.

Mr Mwangi’s 4.54 per cent stake in Equity has earned him Sh343 million, while his wife, Jane Njuguna, is on course to pocketing Sh121 million for her 1.6 per cent stake in the bank.

Equity maintained the Sh2 per share dividend it paid shareholders in 2015 despite a four per cent fall in net profit to Sh16.6 billion last year.

Mr Muriuki is set to walk away with Sh80 million from his 2.05 per cent stake in Co-operative Bank.

Mombasa-based Babla family, who owns big stakes in KCB and Equity, the family of the late Philip Ndegwa, with huge interest in NIC Bank, and Andrew Kimani who is among the top owners at Equity, are also on course to receiving tens of millions of shillings.

The Bablas’ 1.5 per cent stake in KCB is set to earn them Sh141 million in dividends while Mr Kimani’s 2.3 per cent shareholding in Equity should earn him Sh173 million.

The Ndegwa family is expected to earn Sh199 million dividend from its 25 per cent stake in NIC Bank — which maintained a dividend payout of Sh1.25 per share.

These payouts are based on the latest available shareholder data.

Payouts maintained despite income drop

Most banks, including those that reported a fall in profits, either maintained or raised their dividend payouts despite the expected drop in interest income arising from reduced lending to the private sector and the need to raise capital.

KCB led the listed banks in ramping up the dividend payout with a 50 per cent increase that will see shareholders get Sh3 per share compared to Sh2 in 2015.

This means the bank is making a Sh9.19 billion total payout to shareholders, up from Sh6.05 billion in 2015, after factoring in the 40.8 million new shares it issued last year.

KCB’s 2016 profit was near flat at Sh19.7 billion compared to Sh19.6 billion in 2015.

Analysts described KCB’s dividend policy as surprising, pointing to earlier signals that it intended to raise capital.

“The 50 per cent hike in KCB’s dividend per share to Sh3 was surprising because this bank had signalled it would raise some capital in 2016,” said NIC Securities head of research Timothy Wambu.

Only State-owned National Bank of Kenya and mortgage financier HF are yet to release their full-year results ahead of Friday’s deadline.

International investors such as Standard Chartered Plc, Barclays Plc and Standard Bank SA are also eyeing larger dividend cheques from majority stakes in Kenyan subsidiaries.

Standard Chartered raised its dividend per share to Sh20 from Sh17 last year — a 17.6 per cent rise — after it reported a 42.7 per cent increase in net profit to Sh9.05 billion.

This means Standard Chartered Plc, which holds a 73.9 per cent stake in the Kenyan unit, is set to pocket Sh5 billion out of the total payout of Sh6.87 billion.

Barclays Africa, with a 68.5 per cent stake in the Kenyan unit, is set to take home Sh2.98 billion in dividends.

Banks have blamed the rate cap, which was signed into law last September for their less rosy performance in 2016, saying it not only hurt the industry but also the economy in the wake of reduced lending to customers.

Last week, industry lobby Kenya Bankers Association (KBA) said that its members will continue to lend to government as an alternative to the private sector, as long as the rate cap remains in force.

The credit pinch has hit borrowers, who are struggling to access capital to finance business or consumption.

Bank shareholders are on the other hand earning more in return per shilling invested in their shares, the dividend yields having increased in the wake of depressed share prices.

Credit: Business Daily

Published on 30 March 2017 | 8:40 am at Source