Kenyan tycoon Muhoho Kenyatta pockets $6.6 million as NCBA lifts dividend by half

Muhoho Kenyatta is set to collect one more check from a bank his family is in the middle of selling.

NCBA Group declared an interim dividend of Sh3.75 a share on Wednesday, up from Sh2.50 a year earlier, a 50 percent increase that sends Sh6.18 billion ($47.5 million) out to shareholders. Kenyatta held 227.3 million shares as of a May circular to shareholders, the largest disclosed individual position on the Nairobi Securities Exchange at the time. That works out to roughly Sh852 million, or about $6.6 million, on this payout alone.

The timing is what makes it worth noticing. South Africa's Nedbank Group is buying 66 percent of NCBA, and its tender offer closed on July 10 with valid acceptances covering 79.9 percent of issued share capital, an oversubscription of 121 percent. The Kenyatta and Ndegwa families, the bank's two anchor shareholders, committed their stock at Sh105 a share months ago. They are being paid twice on the way out, dividends now and deal proceeds once regulators sign off.

Shareholders on the register as of Aug. 28 get paid on or immediately after Sept. 8.

Profit rose, provisions rose faster

The payout comes off a stronger first half. Net profit reached Sh12.4 billion ($95.4 million) for the six months ended June, up 12.2 percent from Sh11 billion. Operating income climbed 15.1 percent to Sh40.7 billion ($313.1 million), customer deposits grew 11 percent to Sh551 billion ($4.2 billion) and total assets expanded 11.5 percent to Sh739 billion ($5.7 billion).

Underneath those numbers sits a less comfortable one. Credit loss provisions jumped to Sh5.2 billion ($40 million) from Sh3.2 billion, an increase of about 62 percent, far outpacing profit growth.

"We have increased provisions to Sh5.2 billion reflecting the realities of the current operating environment which positions us well to absorb potential risks," Group Managing Director John Gachora said.

Asset quality held up better than the market. NCBA's non-performing loan ratio stood at 10.5 percent against a Kenyan industry average of 15.3 percent.

Digital lending carried the half

The Kenyan banking subsidiary remained the biggest earner, lifting profit 24.3 percent to Sh13.7 billion ($105.4 million). Operations in Uganda, Tanzania and Rwanda contributed Sh1.6 billion ($12.3 million) between them. Non-banking units spanning investment banking, leasing and insurance delivered Sh1.1 billion ($8.5 million), up 40 percent.

Digital loans disbursed hit Sh819 billion ($6.3 billion), a 26.9 percent rise, with mobile channels handling 94 percent of all customer transactions. The bank spent Sh2.4 billion ($18.5 million) on technology, and its wealth management book grew to Sh101 billion ($777 million) across more than 60,000 active customers.

Completion of the Nedbank deal still depends on outstanding regulatory approvals. NCBA stays listed in Nairobi afterward, with 34 percent of the stock in public hands.