Standard Chartered Bank Kenya shareholders are set for a dividend payout despite the lender posting a 33.9 percent full year profit decline on higher provisioning for loan defaults.
The tier I lender said yesterday the board has proposed a Sh10.50 dividend payout, being 16 percent lower than the Sh12.50 that was paid out last year.
The move is despite the lender’s net profit for the financial year ending December 2020 declining to Sh5.44 billion from Sh8.24 billion posted a year earlier.
The current earnings are the lowest since 2010 when the Nairobi Securities Exchange-listed financier returned a net profit of Sh5.37 billion.
Stanchart, which had last year proposed Sh15 per share final payout before halving it and softening this with a bonus issue of one share for every 10 held, now says the latest decision was supported by strong capital buffers.
“The board recognises the importance of dividends to shareholders and believes in balancing returns with investment to transform the business for the long-term, whilst at the same time preserving strong capital ratios,” said Stanchart chief executive Kariuki Ngari.
The profit dip was on account of relatively flat net interest income and 6.7 times rise in loan loss provision to Sh3.88 billion in appreciation of the economic challenges facing borrowers in Covid-19 environment.
Net interest income declined two percent to Sh19.11 billion due to lower interest rates and loan repayment reliefs to customers such as reduced monthly payments.
StanChart’s sharp rise in loan loss provisioning saw total operating costs rise by 21 percent or Sh3.48 billion to Sh20 billion, piling pressure on the bottom-line.
Credit impairment charges
“The actions taken in recent years to improve the quality of our balance sheet sheltered us from some of the worst effects of the pandemic, but we nonetheless incurred credit impairment charges that were significantly higher than the prior year,” said Mr Ngari.
The lender becomes the fourth to issue dividends despite a fall in profits, offering a boost to thousands of retail investors facing cash crunch since Covid-19 disruptions ushered in layoffs, salary cuts and steep revenue falls.
Co-op Bank maintained its payout at Sh1 per share totaling Sh5.86 billion while Stanbic cut its payout by 46.2 percent to Sh1.5 billion.
KCB declared a dividend of Sh1 per share or an aggregate of Sh3.2 billion, representing a 71.4 per cent drop from its normal payout of Sh3.5 per share.