Equity Group shareholders will go for the second consecutive year without dividends after the board on Monday froze the payout as net profits fell 11.6 per cent to Sh20 billion ($182 million).
The lender posted a drop in earnings from Sh22.39 billion ($204 million) booked a year earlier on the back of a five times jump in provisioning for loan defaults in appreciation of economic hardships facing borrowers in the Covid-19 environment.
Loan loss provisioning rose from Sh5.3 billion ($48 million) to Sh26.63 billion ($243 million), piling pressure on the bottom-line despite growth in operating income.
Net interest income rose by 22.6 per cent to Sh55.15 billion ($503 million), while non-interest income grew 25 per cent to Sh38.51 billion ($351 million).
However, the board failed to recommend any dividend on this performance, extending the freeze to two years.
Equity’s last dividend payout was on the 2018 performance, with shareholders taking home Sh7.54 billion ($68 million).
The dividend freeze is despite Equity having recorded the softest fall in earnings compared to KCB (22 per cent), Co-operative Bank (24 per cent), StanChart (33.9 per cent) and Stanbic with 18.6 per cent decline.
KCB, Co-op, StanChart and Stanbic all defied the profit falls to pay out dividends, citing strong capital buffers and the need to support investors.
Equity, the second-largest bank by assets, had last year raised the payout to Sh9.43 billion ($86 million) but recalled it citing the need to preserve cash in the Covid-19 business environment.
The lender’s latest disclosures show that retained earnings have jumped by 20 per cent to Sh118.76 billion ($1 billion).
