Stanbic Banks Uganda has informed it’s shareholders that it will not be able to pay them their dividends for last year because of the Central Bank directive to defer the payment of all discretionary distributions due to Covid-19.
Last week, the bank’s Head of Global Markets, Kenneth Kitungulu cautioned that business activity and new orders decreased for the fourth month running in June due to the continued impact of Covid-19 on the private sector operations.
“As Purchase Managers Index (PMI) reading falls below 50, this indicates that month on month we continue to see a decline in activity even as it’s not as extreme as what we saw in April,” he said.
Kitungulu’s report may have acted as a caution to the shareholders that this time dividends maybe not paid.
According to the chairman Stanbic Uganda Holdings Limited Japheth Katto, although the Bank was willing to pay its shareholders their dividends, the restrictions which were made by the central bank on April 15th 2020 stops them from doing so.
“The communication of April 15th, 2020 regarding the Bank of Uganda directive to Supervised Financial Institutions to defer the payment of all discretionary distributions including dividends, shareholders are advised that BOU declined a request by Stanbic Bank Uganda Limited for an exception.
“It is important to note that dividend payable by Stanbic Bank Uganda Limited, a wholly-owned subsidiary of Stanbic Uganda Holdings Limited (SUHL) forms the dividend pool for SUHL shareholders,” he said.
He added that the Board of Directors (the Board) therefore advises that in the circumstances, no dividend for the period ended December 31st, 2019 will be recommended to SUHL shareholders for approval at the Annual General Meeting of Friday, July 17th, 2020.
“The Board recognises the importance of dividends to shareholders but must comply with the regulatory directive currently in place to ensure business continuity in the short, medium and long term. The Board assures shareholders that the Bank subsidiary remains liquid and well capitalised with sufficient buffers well above the regulatory requirements,” he said.
Stanbic Bank takes the top position in the banking sector having the majority stake of 80 per cent in Uganda’s Commercial Bank since 2001. In 2019, Stanbic Bank controlled 21 per cent of the entire commercial banking assets after its asset base grew by 23.3 per cent to Shs6.6 trillion.
It’s also the largest bank in Uganda having the largest loan book of Shs2.85 trillion or 20 per cent of total industry lending. And the largest deposits portfolio of Shs4.7 trillion or 20.3 per cent of the industry share.
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