Equity Bank Group chief executive James Mwangi. Photo credit: File Photo | Nation Media Group
The families of Jomo Kenyatta and former Central Bank of Kenya Governor Philip Ndegwa, I&M Bank founder Suresh Shah and Equity Group chief executive James Mwangi are among the top beneficiaries of the combined Sh63.1 billion dividends that Kenya’s listed banks will pay.
The Kenyattas, who hold a 13.2 percent stake in NCBA Group through Enke Investment, will pocket a record Sh1.03 billion after the lender raised its dividend per share 11.8 percent to Sh4.75.
The Ndegwa family, which owns a 14.94 percent stake in the same bank through First Chartered Securities, will earn Sh1.17 billion in dividends, from Sh876.65 million, gaining from their decision to buy additional 8.25 million shares last year.
Andrew Ndegwa will get Sh335.4 million in dividends for his 4.3 percent stake while James Ndegwa, who holds 4.23 percent, will earn Sh329.9 million after the family split the First Chartered Securities stake among the siblings.
Other top earners are Co-operative Bank managing director Gideon Miuriuki, Baloobhai Patel and his wife Amarjeet B Patel with stakes in Co-op Bank and Absa and Mr Shah’s two sons—Sachit Shah and Sarit Shah— of I&M Bank.
The standout payouts to top shareholders come in the period listed banks, excluding KCB, HF and BK Group, have increased their combined dividend payouts by 11.4 percent to Sh63.1 billion from Sh56.63 billion as profits rose.
The dividend bonanza reinforces the banking sector as a consistent dividend payer amid a slight dip in profits
The sector’s pre-tax profits dropped 7.3 percent to Sh226.3 billion as they set aside additional money to cover potential loan defaults.
Investors in banks have also seen the value of their investment at the Nairobi Securities Exchange (NSE) appreciate.
KCB is leading the pack this year with a 37.7 percent rise in share price since the start of 2024 followed by Equity (27.9 percent), Co-op (22.8 percent), HF (17.8 percent) and Absa (16.6 percent).
The increase in dividend payout has been replicated across nearly all the tier-one banks with the exception of KCB, which froze payout for the first time in 21 years, citing the need to preserve capital.
Equity maintained its payout at Sh15.1 billion despite a drop in profit while Co-op kept its distribution at Sh8.8 billion despite profit growth.
Mr Mwangi, who owns a 3.39 percent direct and indirect stake in Equity, will earn Sh511.89 million, cementing his position as the biggest individual dividend earner from Kenya’s most profitable lender.
Equity’s net profit fell 6.5 percent to Sh41.98 billion in the financial year ended December 2023.
Mr Shah, the founder and chairman of I&M Bank, will receive Sh445.2 million for his 10.6 percent stake in the lender.
His two sons Sachit Shah and Sarit Shah will each receive Sh96.6 million for their stake of 2.3 percent each. This is after the lender raised dividends by 13.5 percent to Sh4.2 billion as profits grew.
Co-op Bank managing director Muriuki, the top individual shareholder in the lender with a two percent stake, will receive Sh176 million.
This will be a rise from the Sh154 million he earned the previous year when he had a 1.75 percent stake in the bank that he has led for over two decades.
Banks have been generous with their dividend distribution, which they say is mostly influenced by good performance and investment plans.
Standard Chartered Bank Kenya, for instance, raised its dividend payout by 32 percent to a record Sh29 per share amounting to Sh10.96 billion or an equivalent of nearly 80 percent of the Sh13.8 billion net profit.
The chief financial officer at StanChart Kenya, Chemutai Murgor, said the lender does not have a targeted portion of profits to distribute as dividends but the capital risk appetite usually guides the decision.
“We do have a capital risk appetite that is calibrated to allow us to retain enough to support our growth and any excess, we give it back to the shareholders,” said Ms Murgor.
Others such as Equity have a policy to distribute between 30 percent and 50 percent of net profit, guaranteeing investors a dividend every year the lender makes a profit.
Billionaire investor Baloobhai Patel, who last year purchased millions of additional shares in Absa and Co-op Bank, will receive a combined Sh200.08 million, up from Sh139.92 million the previous year. He owns the stakes alongside his wife, Amarjeet B Patel.
Mr Patel and his wife purchased additional 8.3 million shares in Absa last year, taking their stake to 1.03 percent from 0.88 percent a year earlier. They will get Sh86.58 million from the lender.
From Co-op Bank, the duo will get about Sh113.5 million on his stake. This is after they bought 35.2 million additional shares in the lender, taking their stake to 1.29 percent.
Mr Patel’s interests in the stock market are spread beyond banking, with stakes in Carbacid Investments Bamburi Cement, Sanlam Insurance and CIC Insurance. In Bamburi, where he holds a 4.12 percent stake, he is in line for a Sh81.8 million dividend after the cement maker raised its payout to shareholders 7.3 times to Sh5.47 per share.
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