NBK pays first dividend in a decade

March 17, 2011
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, NAIROBI, Kenya, Mar 17 – The National Bank of Kenya (NBK) will for the first time in 12 years pay dividends to its shareholders as the bank continues with its journey back to profitability.

Speaking while releasing the bank’s 2010 financial results, NBK Managing Director Reuben Marambii said the board had recommended a payout of Sh0.60 per share.

The dividend payout is made possible by the bank’s 38 percent increase in net profits, which rose from Sh1.5 billion a year earlier to Sh2 billion.

“I am glad to answer the question I was asked in 2000, and tell our shareholders that this year they will receive dividends for their shares in the bank,” Mr Marambii said.

Out of the Sh2 billion net profits, the bank will use half of the profit – Sh1.02 billion – to pay dividends to its shareholders.

“We will pay half of what we made to shareholders, the other will be retained as earnings which will be used to grow the bank even further,” the MD told investors.

Mr Marambii said going forward the bank would adopt a similar policy of paying out half of its profits to shareholders as repayment for their faith and support to the bank.
Bad debts associated with politically connected individuals led the bank into massive losses and debt in the late 90s.

It swung into profits in the middle of that decade, but could not pay dividends as earnings went into covering the past losses.

During the year, net interest income grew 31 percent to Sh4.37 billion as the bank was able to grow its lending to customers by Sh8 billion.

Customer deposits grew by 14 percent from Sh42 billion to 48 billion boosted by its 400,000 customer base which includes a number of government agencies.

“We are happy to be crossing the Sh2 billion mark (profit). The improvement may largely be attributed to the way we have grown our lending and we encourage more people to come to us for money,” Mr Marambii said.

The bank’s total assets grew by 17 percent to Sh60 billion from Sh31 billion while liabilities grew from Sh43.4 billion to Sh50 billion.
 
To boost growth further, the bank intends to open 20 new branches in strategic business locations by the end of 2011.

The Sh600 million investment comes after years of dormancy that saw the bank lose out to other financial institutions.

"For the last 10 years, we have not been opening any branches. There are very many parts in this country where our presence is not felt,” he said.

The MD however ruled out regional expansion in the near future saying :”we need to satisfy the needs in this country first before we can go into the region.”

National Bank is one of the institutions the government plans to privatise and get new investors, but Mr Marambii was unable to give a definite time of when it would be done.

“Privatization is agreed and finished, it will be done. It is simply a question of when because at the moment it is not an emergency,” he said.

The government has 70 percent stake in the bank, 22 percent directly and 48 percent through the National Social Security Fund.

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