Equity Bank withdraws Sh9.5b dividend payout to enhance liquidity

Wednesday, May 27th, 2020 00:00 |
Equity Group managing director James Mwangi. Photo/PD/File

FINANCIALS:  Nairobi Securities Exchange’s (NSE) largest listed bank by market capitalisation Equity Group Holdings Plc, has withdrawn a Sh9.5 billion dividend payout recommendation to shareholders.

The banks’ board says the dividend payout move follows the lender’s assessment of risk on the balance sheet on the back of Covid-19 shocks.

“Equity Group Holdings Board took a conservative approach that recognises the emerging unquantified risk of the pandemic and opted to preserve capital in the face of the prevailing uncertainty,” said Equity Group chief executive and managing director James Mwangi.

Capital position

Mwangi said a strong capital and liquidity position would give Equity the capacity to cushion the business and accommodate customers. 

He said the board encourages the bank’s customers to seek opportunities to innovate in the age of the pandemic, and to “keep looking for growth possibilities even in this trying time” in order to preserve cash and capital, and to not just survive the crisis but to be ready to thrive in the new normal.

By withdrawing the recommendation for a dividend payout, Mwangi said the board was exercising financial prudence to conserve cash and enable the Group to respond appropriately to the unfolding crisis. 

That would be achieved by supporting its customers and to direct cash resources to potential opportunities that may arise as economies in which Equity Group Holdings operates begin to recover.

“If the economic crisis mutates into a financial crisis, Equity Group will be well placed to weather the challenge with a strong capital base, strong liquidity and an agile balance sheet that improves its leverage, and allow the financial services group to shield and accommodate its customers throughout this period of uncertainty,” said Mwangi.

However, he said, should the crisis continue, the board will explore various options and make suitable recommendations that will enhance shareholder value. 

This way, he said, the group’s leadership and management will be focussed on strategically positioning the business to protect and preserve its customer base through loan accommodations, rescheduling and restructuring.

 This would enable the bank go through the prevailing turbulence while at the same time preserving cash to shore up the financial revival and growth of its customers’ businesses post Covid-19.

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