StanChart Bank Kenya Drastically Cut Its FY 2019 Shareholder’s Dividend by 50pct

StanChart Record 30.4% Profit Decline on Covid-19 Loan Defaults

Stanchart CEO Kariuki Ngari I Courtesy

Standard Chartered Bank Kenya (SCB) The dividend has been halved from Ksh 15 per share to Ksh 7.5 for every ordinary share for the year ended 31 December 2019 attributed to the impact caused by the coronavirus pandemic.

According to the lender’s Board of Directors to compensate for the reduction, it resolved to recommend to the shareholders at the forthcoming AGM bonus issues in the proportion of 1 new ordinary share for every 10 fully paid-up ordinary shares to registered shareholders.

The board, after careful consideration of the events, particularly the rapidly unfolding economic crisis that has come out of the COVID-19 pandemic, has decided to vary its recommendation and instead recommend to the shareholders the payment of a final dividend for the year ended 31 December 2019 of KSH 7.50 for every ordinary share of Ksh 5.00,” Nancy Oginde, Stanchart Board Secretary. 

The initially proposed Ksh 15.00 dividend was to be paid to shareholders at the close of business on 27 April 2020.

A virtual AGM is scheduled for 24 July 2020.

“The review of 2019 dividend from KSh15 to KSh7.50 plus a 1:10 bonus gives investors a yield of 4.5 percent on the cash dividend plus 10 percent stock dividend (before price dilution by the bonus shares),” said Genghis Capital in its weekly report.

“While investors were counting on the cash dividend…this translates to a return of 14.5 percent, significantly better than the 8.9 percent cash dividend yield as previously recommended.”

According to Genghis, while investors were counting on the cash dividend, this is a better outcome compared to Equity Group that eliminated its FY19 dividend. 

Equity Group had initially proposed a dividend payout of KSh2.50 per share or a total of KSh9.4 billion.

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On the other hand, Equity Group and NCBA bank have withdrawn their proposed dividend payments to their investors citing market uncertainty.

NCBA canceled its earlier dividend declaration of KSh1.50 per share ( KSh2.2 billion) and replaced it with a bonus share of one for every 10 held.

Updated with Genghis Capital commentary.