Stanbic Holdings Plc has cut its interim dividend payout by more than half despite its profit remaining flat as it seeks to boost capital and support growth.
The listed group, affiliated with Africa’s largest lender Standard Bank of South Africa, announced an interim dividend of Sh1.64 per share, down from Sh3.80 paid out at the same time last year.
The drop is despite the group posting a profit after tax of Sh6.6 billion for the six months ended June, a one percent rise compared to Sh6.54 billion posted a year earlier.
Stanbic Holding, which comprises Stanbic Bank Kenya, its South Sudan operations, investment bank SBG Securities and bancassurance business, attributed the dividend cut to a need to boost its capital.
“The dividend discussion is actually from the balance sheet growth – the core capital has to support it (balance sheet growth). Which is why when you see the balance sheet has grown, then the equity position also needs to increase,” Dennis Musau, the bank’s chief financial officer, told Business Daily.
The bank, which is the main operation of the group, reported a 23 percent increase in deposits to Sh426.6 billion while its loan book expanded by 24.7 percent to Sh290.6 billion.
The growth in the loan book was attributed to increased uptake of dollar-denominated debt. It was also supported by increased investment in government securities by nearly fourfold to Sh71.5 billion from Sh18 billion in June last year.
The balance sheet expansion narrowed Stanbic’s capital adequacy margins even with the profit retention. Stanbic’s total capital to total risk-weighted assets ratio declined to 16.8 percent, being 2.3 percentage points above the minimum regulatory level of 14.5 percent. The margin stood at 4.4 percentage points a year earlier.
Mr Musau noted the bank’s profit line did not grow as fast as the balance sheet due to the recent reduction in interest rates in the country squeezing the lender’s net interest margins.
The bank’s management, however, indicated it will retain its dividend policy of between 50 and 60 percent payout when it comes to the full year. Stanbic had a non-performing portfolio of Sh22.7 billion, being 7.3 percent of its loan book compared to an industry average of 15.6 percent as at the end of March 2026.
The lender is now eyeing the retail market through digital platforms and has set aside Sh2.5 billion for investment in technology to support the channels.
It recently poached Michael Mutiga from Safaricom Limited to be its chief executive, signalling a more aggressive approach in the digital space. The bank expects to reap from the digital investment in under three years, given it has existing products.
“Usually you get full commercialization two to three years down the line, but there are some that are mature; for example, our mobile app is quite mature. Our Stanbic platform for SME customers has just gone live in July, so in another two to three years, it will also be maturing,” said Mr Musau.
Previously, the bank has relied on non-funded income such as forex trading, which have taken a hit with the stability of the shilling eliminating margins.
