The families of Jomo Kenyatta, former Central Bank of Kenya Governor Philip Ndegwa, I&M Bank founder Suresh Shah and Equity Group CEO James Mwangi are among the biggest beneficiaries of the total Sh63.1 billion dividends to be paid by Kenya's listed banks.
The Kenyatta family, which owns a 13.2 per cent stake in NCBA Group through Enke Investment, will receive a record Sh1.03 billion after the bank raised its earnings per share by 11.8 per cent to Sh4.75.
The Ndegwa family, which owns a 14.94 percent stake in the same bank through First Chartered Securities, will receive a dividend of Sh1.17 billion, from Sh876.65 million, benefiting from its decision to buy an additional 8.25 million shares last year.
Andrew Ndegwa will receive a dividend of Sh335.4 million for his 4.3 per cent stake, while James Ndegwa, who owns 4.23 per cent, will receive Sh329.9 million after the family split the First Chartered Securities stake between the siblings.
Other top earners include Co-operative Bank's managing director, Gideon Miyoriuki, Balubhai Patel and his wife Amarjeet P Patel, who own shares in Co-operative Bank and Absa, and Mr Shah's two sons – Satchit Shah and Sarit Shah – of I&M Bank.
The premium payout to major shareholders comes as the listed banks, excluding KCB, HF and BK Group, increased their combined dividend by 11.4 per cent to Sh63.1 billion from Sh56.63 billion as profits rose.
The dividend reinforces the banking sector as a consistent dividend payer amid a slight decline in profits
The sector's pre-tax profits fell by 7.3 percent to Sh226.3 billion, as they set aside additional funds to cover potential loan defaults.
Investors in banks also saw the value of their investments rise on the Nairobi Stock Exchange.
KCB leads the pack this year with a 37.7 percent rise in share price since the start of 2024, followed by shares (27.9 percent), cooperatives (22.8 percent), HF (17.8 percent) and Absa (16.6 percent).
The dividend hike was replicated in almost all top-tier banks except KCB, which froze its dividend for the first time in 21 years, citing the need to preserve capital.
The stock maintained its payout at Sh15.1 billion despite a decline in profits, while Co-op maintained its payout at Sh8.8 billion despite earnings growth.
Mr Mwangi, who has a direct and indirect 3.39 per cent stake in the shares, will receive Sh511.89 million, strengthening his position as the largest individual earner of the most profitable lender in Kenya.
Net dividends fell by 6.5 percent to Sh41.98 billion in the financial year ending December 2023.
Mr Shah, founder and chairman of I&M Bank, will receive Sh445.2 million for his 10.6 percent stake in the bank.
His two sons, Satchit Shah and Sarit Shah, will each receive Sh96.6 million for their 2.3 per cent stake each. This is after the bank raised dividends by 13.5 percent to Sh4.2 billion as profits grew.
Muriuki, managing director of the Cooperative Bank, who is the largest individual shareholder in the bank with a 2% stake, will receive Sh176 million.
This would be up from the Sh154 million he earned the previous year when he had a 1.75 percent stake in the bank he led for more than two decades.
Banks have been generous with their dividends, which they say are mostly influenced by good performance and investment plans.
For example, Standard Chartered Bank Kenya raised its dividend by 32 per cent to a record Sh29 per share amounting to Sh10.96 billion or about 80 per cent of net profit of Sh13.8 billion.
Standard Chart Bank Kenya CFO Chimutai Murgor said the lender does not have a target portion of profits to distribute as dividends, but the appetite to risk capital usually guides the decision.
“We have a capital risk appetite that is calibrated to allow us to retain enough to support our growth and any surplus, we return to shareholders,” Ms Murgor said.
Other companies, such as stocks, have a policy of distributing between 30% and 50% of net profit, guaranteeing investors a dividend every year the lender makes a profit.
Billionaire investor Baloobhai Patel, who last year bought millions more shares in Absa and Co-op Bank, will receive Sh200.08 million, up from Sh139.92 million the previous year. He owns the shares along with his wife Amarjeet P. Patel.
Patel and his wife bought an additional 8.3 million Absa shares last year, taking their stake to 1.03 per cent from 0.88 per cent the previous year. They will receive Sh86.58 million from the lender.
From Co-op Bank, the duo will receive about Sh113.5 million of their share. This is after they bought an additional 35.2 million shares in the bank, bringing their stake to 1.29 percent.
Patel's interests in the stock market extend beyond banking, as he owns stakes in Carbacid Investments Bamburi Cement, Sanlam Insurance and CIC Insurance. In Bamburi, where he has a 4.12 per cent 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.
