StanChart rewards shareholders with Sh11.7B dividend despite profit slump

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Standard Chartered Bank Kenya has proposed a final dividend of Sh23 per share on Wednesday, maintaining an aggressive payout strategy despite a 38 per cent drop in full-year profit following a one-off pension charge.

The bank, a local unit of London-based Standard Chartered PLC, reported a profit after tax of Sh12.4 billion for the year that ended on December 2025. This is a sharp decline from the Sh20.1 billion net profit recorded in 2024, a year in which the bank saw a 45 per cent surge in earnings.

The results, which mark the conclusion of veteran banker Kariuki Ngari’s seven-year tenure as Chief Executive, will see the bank distribute Sh11.7 billion for the 2025 financial year to its shareholders.

The figure represents a retreat from the record Sh17 billion payout distributed in 2024, when the lender’s performance peaked.

The lender’s top line came under significant pressure as operating income fell by 17 per cent to Sh42.3 billion.

The contribution to earnings was weighed down by margin compression resulting from a lower interest rate environment, which saw net interest income decrease by 13 per cent to Sh28.9 billion.

Non-funded income further dropped by 23 per cent to hit Sh13.4 billion, driven by declining transactional volumes in transaction services and markets, the bank said.

Total operating expenses further rose by four per cent to Sh20.9 billion, but the bottom line was further eroded by a Sh2.6 billion past service cost related to a long-running pension dispute.

Despite the earnings contraction, the board’s recommendation of a Sh23 final dividend brings the total payout for 2025 to Sh31 per share.

This follows a significantly higher total dividend of Sh45 per share in 2024 (comprising an Sh8 interim and Sh37 final dividend).

While the absolute total distribution of Sh11.7 billion is lower than the previous year’s record Sh17 billion, the bank has significantly increased its payout ratio to 95 per cent of earnings to sustain investor returns.

Outgoing CEO Ngari, who retires on April 16, will be succeeded by Birju Sanghrajka, the current head of corporate and investment banking, following a management shake-up announced in January.

"A record-high dividend payout ratio of 95 per cent demonstrates our commitment to consistently deliver sustainable returns to our shareholders," Ngari said in a statement.

The payout will flow predominantly to the ultimate parent, Standard Chartered PLC, which holds a 73.89 per cent stake.

On the balance sheet, net loans and advances to customers edged up two per cent to Sh154.3 billion, while customer deposits declined by four per cent to hit Sh283 billion.

The bank also said the loan impairment charges reduced by 16 per cent to Sh2 billion due to aggressive recoveries and improved asset quality oversight.

Ngari described the current Kenyan economic environment as stable but cautioned that global uncertainty, particularly regarding conflict in the Middle East, remains a risk to the 2026 outlook.

The leadership transition to Sanghrajka comes as the bank seeks to defend its margins in a declining rate cycle while balancing the high-yield expectations of its London-based parent.