Stan-Chart shaves Ksh.2.6 billion from shareholder pay on COVID-19 fears

Standard Chartered bank has halved its final dividend to shareholders to Ksh.7.50 a share from an initially declared Ksh.15 per share pay-out.

In a statement issued Friday, the bank has attributed the shave on shareholder gains to volatilities surrounding the COVID-19 pandemic.

“After careful consideration of the events that have taken place since the said financial results were published, particularly the rapidly unfolding economic crisis that has come out of the pandemic, the board has decided to vary its recommendation,” the bank noted.

The board of the lender has consequently recommended a bonus issue share at the rate of one new ordinary share for every 10 fully paid ordinary shares.

Standard Chartered becomes the third lender in Kenya to pull out dividends after Equity Group and NCBA.

Like Stan-Chart, NCBA pulled its final Ksh.1.50 dividend replacing it with a similar bonus share issue.

On its part Equity Group withdrew its Ksh.9.5 billion shareholder pay-out in May as it saw its quarterly profits dip by 14.5 percent on higher provisioning for bad loans.

The withdrawal of dividends is seen as a measure to preserve cash for banks as they face up to an uncertain near-term future from the widespread disruptions brought forth by the pandemic.

Lenders in other jurisdictions including Brazil and the United Kingdom have suspended dividends at the request of their regulators as the Central Banks too wary for the industry’ stability.

In Kenya, the Central Bank of Kenya (CBK) has not made pronouncement to banks as it expects the sectors strong capital adequacy and liquidity ratios of 18.43 percent and 51.17 percent as of April against statutory requirements of 14.5 percent and 20 percent to see the industry through murky waters.

The reserve bank is however confronted by deteriorating asset quality inside banks as the ratio of gross non performing loans rise above 13 percent forcing banks to set aside billions in expected credit losses in accordance to newly implemented accounting standards.

Standard Chartered Bank has however been spared from the rot with its stock of bad loans falling to Ksh.20 billion through the first quarter of 2020 from Ksh.21.2 billion in a similar period last year.