The global Covid-19 pandemic has deepened pressure on shareholder dividends as companies move to hold onto the money they have earned in the last financial year in the wake of the uncertainty.
Nairobi Securities Exchange
The global Covid-19 pandemic has deepened pressure on shareholder dividends as companies move to hold onto the money they have earned in the last financial year in the wake of the uncertainty.
Companies are considering holding on to the cash to ensure they have enough reserves to carry out their businesses after the pandemic.
Several regulators around the world have suspended dividend distribution for 2019 and 2020 for banks until the end of June in order to boost capital and support lending during this period.
Analysts said regulators around the world are keen to ensure lenders enter this period with strong capital positions sufficient to accommodate any shocks.
Pressure to slice dividends is coming from varied sources. Both regional and European regulators have recently recommended that lenders pause dividends until October. Many companies in other sectors have also taken cue.
Listed Tier One lender NCBA
Tuesday became one of the first in Kenya to announce that it would withhold dividend payments to shareholders totalling Sh2.24 billion as more companies explore similar options to weather the financial turbulence caused by the deadly disease and to keep money for the future.
In a move that is likely to be closely watched by regulators and other lenders, NCBA said it would instead offer additional shares to shareholders in lieu of its final dividend for last year of Sh1.50 shillings per share due to the coronavirus crisis.
The bank will offer investors a bonus share for every 10 held, it said in a statement yesterday.
“The board has considered events that have taken place since the financial results were published, particularly the unprecedented Covid-19 pandemic and its devastating effects to the world and the Kenyan economy,” said the bank.
