A customer at a KCB banking hall in Nairobi. FILE
Nation Media Group
By George Ngigi
KCB
is set to cut its dividend payout as it seeks to build cash reserves to
back new investments, said an investment bank citing interview with the
bank’s management.
The largest lender in Kenya in terms of assets has
said it intends to raise the ratio of shareholders’ capital to assets
which at 12.4 per cent is below the industry average of 14.5 per cent.
“Management has guided for a lower payout going
forward,” said Standard Investment Bank in a research note released
after KCB’s first quarter results announced last week.
“Based on our forecasts, at best, we expect
KCB’s return on equity to hover around sector average—from our
discussions with management, we lack strong conviction on how KCB will
improve its margins, and on volume growth, KCB currently has one of the
lowest equity to assets ratio,” added the SIB report.
Banks are expected to back every Sh12.50 lent out
to borrowers with one shilling of shareholders’ equity. Last year KCB
paid out 46.3 per cent of its net profit to shareholders, being Sh1.90
per share compared to Sh1.85 the previous year.
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