Kenya: Listed banks pay record Sh51.7 billion dividend

Local listed banks nearly trebled their dividend payout for the 2021 financial year, rewarding shareholders who have seen a mixed performance in capital gains on their stock in the period.

The nine lenders, including Equity, KCB, and Co-op Bank, have proposed to pay their shareholders Sh51.7 billion for the period, up from Sh18.8 billion in 2020. The payout marks a new record, surpassing the previous peak of Sh31.7 billion seen in 2019.

Only loss-making HF Group is not paying a dividend for the year ended December 2021.

The enhanced payout has come after a 73% growth in cumulative gross profit to Sh194.8 billion for the banking sector in 2021, as it recovered from the Covid-19 led economic slowdown of 2020.

The lenders had either reduced or withheld dividend payments altogether in 2020 as their sought to build capital buffers during the pandemic, and also required approval from the Central Bank of Kenya before making any distribution to shareholders.

In terms of the absolute amount of dividends paid, Equity Group leads the listed lender segment at Sh11.32 billion, having posted the sector’s largest-ever net earnings of Sh39.1 billion in 2021.

It is followed by KCB with a payout of Sh9.4 billion, from a net profit of Sh34.2 billion, and Standard Chartered Kenya at Sh7.1 billion, having made a net profit of 9.04 billion in the period.

In terms of the share of net earnings distributed to shareholders, StanChart leads the listed lenders at 79%, followed by Absa at 55%, Stanbic Kenya at 49%, and NCBA at 48%.

The dividends have helped cover for some lacklustre performances in share price gains in half of the listed lenders in the past 12 months.

Going by Tuesday’s closing prices, only four out of the nine listed lenders have seen a double-digit price gain in percentage terms at the NSE in the period, with three recording a price decline.

The top gainer in the period has been Absa (30.8%), while HF Group’s share has declined by 8.2% during the period.

This has however resulted in some lenders offering dividend yields (at the current price) that are rivalling or beating those offered by the risk-free, one-year Treasury bills (9.75%).

Stanchart had the best banking dividend yield of 13% at Tuesday’s prices followed by NCBA at 11%, with Stanbic and Absa at 9% each.