Investors in Standard Chartered Bank of Kenya (StanChart) will receive 7.18 billion shillings in dividends after the lender upped the payout on the basis of strong five-year profits.
The lender said yesterday the board had proposed a final dividend payment of 14 shillings per share to be added to the interim payment of 5 shillings per share which was in December 2021.
StanChart’s increase in shareholder returns was driven by net profit for the year ended December 2021, which jumped 66% to 9.04 billion shillings, the highest in five years.
“2021 has been an outstanding year for the bank despite the difficult conditions related to the pandemic, with a 70% improvement in pre-tax profit,” said StanChart Kenya Managing Director, Mr. Kariuki Ngari.
StanChart shares closed as the second-best gainer on the Nairobi Stock Exchange yesterday after gaining 7.44% to close at 140.75 shillings to add investors’ paper wealth of 3.68 billion shillings.
The total dividend payout will amount to 7.18 billion shillings, an increase of 81% from the 3.97 billion shillings paid on 2020 performance at the height of the Covid-19 disruptions.
At 19 shillings per share, down from 10.50 shillings the year before, the lender matched the 2019 payout, indicating a return to pre-pandemic payouts.
Final dividends to ordinary shareholders, totaling 5.29 billion shillings, will be paid on or after May 25, 2022.
Stanchart’s earnings per share, which shows how much money a company makes for each share held, fell from 13.95 shillings to 23.49 shillings a year earlier.
The lender’s improved performance was helped by higher non-interest income and lower operating costs, which more than offset a 19.12 billion shilling drop in net interest income. at 18.81 billion shillings.
Non-interest income increased from 8.29 billion shillings to 10.35 billion shillings, helped by growth in fees and commissions and income from foreign exchange transactions. StanChart’s chief financial officer, Ms. Chemutai Murgor, said wealth and capital markets products were behind the growth in unfunded revenue.
Operating expenses fell 17.2% or 3.44 billion shillings to 16.57 billion shillings, to ease the pressure on the bottom line.
Lower operating costs were largely helped by a reduction in loan loss provisioning from 3.88 billion shillings to 2.08 billion shillings due to the easing of economic hardship from Covid-19 among borrowers .
“We have recalibrated our models because our portfolios are doing well and as a result the expected credit loss has decreased by 46%,” Ms Murgor said.
Personnel costs also fell from 7.7 billion shillings to 6.3 billion shillings thanks to the lender reducing its workforce.
In November last year, the bank spent 1.35 billion shillings to lay off 200 staff during a period when queues at banking halls were down, prompting lenders to invest more in digital service channels.
“For six years we have been ranked as the best digital bank and this is an area we will continue to invest in to ensure customers have transaction options,” Ngari said.
Ngari said the lender viewed inflationary pressures, the Russian invasion of Ukraine and the general election year as near-term risks.
The lender is also still in talks with the Central Bank of Kenya over its risk-based pricing formula, with the CEO saying only that they were at the “end” of the process.