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Shares of KCB Group Plc plunged the most in 18 years after Kenya’s biggest bank by assets declared a lower-than-expected dividend.
The stock dropped 9.1% to 40.10 shillings in Nairobi after dropping as much as 21%, the most intraday since 2007. The 3-shilling-a-share dividend that the company declared Wednesday was below the average estimate of 3.83 shillings from three analysts.
KCB on Wednesday reported a 66% jump in 2024 profit, the fastest growth in three years. The dividend is equal to about 16% of the bank’s earnings per share last year.
“The shareholders are not happy,” according to Ronny Chokaa, senior research analyst at Capital A Investment Bank. “One-year treasury bills are at 10% but they’re giving a dividend yield of 6.7% — I think shareholders can’t take that kindly.”
The Nairobi-based bank is building a pipeline to fund future projects including expansion plans into markets like Ethiopia that are opening up, Chief Finance Officer Lawrence Kimathi said in an interview.
“There are a number of considerations that we’ve looked at by the time we arrived at the final dividends – the capital requirements for some of our subsidiaries, some of the deals that are in the pipeline that I can talk about which will require investment capital,” he said.
The lender is awaiting approval from the Central Bank of Kenya on the sale of National Bank of Kenya to Nigeria’s Access bank, he said.
The exit multiple they’re looking at for National Bank is lucrative, according to Chokaa.
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