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Absa and NCBA buck the trend with interim dividends pay-out – Business Daily

NCBA branch in Nairobi. FILE PHOTO | NMG
NCBA Group and Absa Bank Kenya have bucked the trend among tier one lenders in the first half of the year by paying interim dividends to their shareholders, indicating optimism of continued income growth in a challenging economic environment due to the high cost of living.
NCBA on Thursday said it is paying an interim dividend of Sh2 per share, translating to a total payout of Sh3.29 billion.
Absa will be paying its shareholders an interim dividend of 20 cents, similar to what it paid in the corresponding period of last year, which is the equivalent of a total payout of Sh1.08 billion.
The other six tier one lenders that have so far announced their half-year financial results have steered clear of interim dividends, including perennial payers Standard Chartered Bank Kenya and Stanbic.
Absa in a statement yesterday pointed to a strong capital position and improved profitability levels as a reason for retaining its interim dividend.
“The bank’s return on equity is at 23 percent in the period under review, having improved from 19 percent in the same period last year. The board has recommended an interim dividend of Sh0.20 per share in line with our strategy of delivering returns to our shareholders,” Absa said.
“We remain cognisant of the challenges and opportunities presented by our operating environment. Our capital position remains strong, allowing us to support our growth ambitions while responding appropriately to any events in the external environment.”
The lender’s net profit for the six-month period increased by 13 percent to Sh6.29 billion, helped by higher interest income from customer loans, which grew by a fifth to Sh13.3 billion.
NCBA’s interim payout was backed by a jump of 67 percent in net profit for the half-year period to Sh7.77 billion.
The bank’s higher profits were boosted by higher foreign exchange trading fees, which more than doubled to Sh5.29 billion from Sh2.38 billion in the first half of 2021, and interest income from government securities which rose by 28 percent to Sh11.9 billion.
Other lenders’ despite recording strong profit growth, have held back from half-year distributions, pointing to banking sector concerns over the economy due to external shocks that have raised inflationary pressure in the country.
The country’s inflation rate hit a 62-month high of 8.3 percent in July, while the prolonged presidential election that is now the subject of a Supreme Court petition has added to the uncertainty about the economy.
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.