Equity Group will not pay shareholders an interim dividend for the six months ended June despite a 36 percent jump in profits, becoming the third top bank to do so amid caution to preserve capital buffers
The Nairobi Securities Exchange (NSE) listed bank has posted an after-tax profit of a 35.4 percent rise in net profit through the opening half of the year to Sh23.7 billion from Sh17.5 billion last year.
Equity has joined other tier-I banks such as Stanbic Bank and Standard Chartered Bank opting not to pay shareholders an interim dividend despite posting considerable net profit increases during the half-year.
Stanbic, which recorded a 36.95 percent jump in net profit to Sh4.79 billion, skipped the dividend payout despite paying an interim dividend of Sh1.70 per share in a similar period last year.
The lender paid a final payout of Sh7.3 per share for the full financial year to December 2021.
Standard Chartered also did not pay an interim dividend for the half-year period. The bank recorded a 10.9 percent jump in net profit to Sh5.41 billion.
This is after the bank’s net profit nearly doubled to Sh39.1 billion. The lender had frozen dividend payouts in 2019 and 2020 to conserve cash following the outbreak of the Covid-19 pandemic.
The freeze on payment of interim dividends by lenders underlines the resolve by banks to preserve cash amid lingering economic uncertainty due to the ongoing electoral dispute at the Supreme Court.
The lender’s earnings from interest on loans and government securities during the half-year went up to Sh55 billion up from Sh42.8 billion as the lender accelerated lending to customers by a similar percentage from Sh504.8 billion to Sh650.6 billion.
Equity Group chief executive James Mwangi said demand for loans has surged as businesses seek to recover from the effects of the pandemic that saw a sharp downturn in business activities.
“The loan growth was targeted to supporting our clients to recover and rebuild after the Covid-19 business disruptions while allowing re-purposing and retooling for resilience and agility to take advantage of emerging opportunities and green shoots in the real economy,” said Mr Mwangi.
SOURCE: DAILY NATION