Family Bank board is proposing to pay Sh798 million dividend despite the net profit for the financial year ended December 2022 dropping by 4.1 per cent to Sh2.21 billion on increased costs.
The lender said it was going to pay a first and final dividend of Sh0.62 per share or a total of Sh798 million, being a cut from the previous year where dividends totalled Sh1.1 billion or Sh0.83 per share.
This will mark the second year running for the lender to pay dividends. Family Bank investors were in 2020 given a bonus share of one for every three held, citing the need to preserve cash during the Covid-19 disruptions.
“The directors of Family Bank Limited have recommended a payment of the first and final dividend of Sh0.62 per share for the year ended December 2022,” it said. Family Bank’s profit drop from the previous year’s Sh2.31 billion was despite the growth in both interest and non-interest income.
The drop in profit came on the back of operating expenses rising by 9.9 per cent from Sh7.5 billion to Sh8.2 billion mainly on increased staff costs.
Family Bank’s tax expense also rose by 48.5 per cent from Sh1.03 billion to Sh1.53 billion, further trimming profits. The net interest income grew from Sh7.76 billion to Sh8.59 billion while non-interest income hit Sh3.35 billion from Sh3.03 billion.
The lender cut provision for non-performing loans (NPLs) from Sh768 million to Sh495 million as gross NPLs rose from Sh11.05 billion to Sh12.43 billion.
From running one branch in 1985, the bank has grown to become a fully-fledged commercial bank in May 2007. Family Bank is set to get a Sh3.95 billion ($30 million) loan from the African Development Bank(AfDB) for onward lending to small and medium-sized firms (SMEs).
The AfDB board this week approved the facility. “The facility will provide a trade finance line of credit to support FBL’s short-term trade finance activities, a transaction guarantee,” the development bank said.