watesh wrote:MaichBlack wrote:I even have a feeling the government had a lot to do with the surprising depressed dividend payment by the bank. Someone might need the Bank cash rich for some reason.
KCB just did two major acquisitions in two years. TMB needed a whooping Ksh25bn cash deal to close and BPR needed Ksh5.3bn. There is also a challenge of bad loans during Oigara's era. Provision for these bad loans has eaten into the core capital yet on the other side deposits are still growing. NBK also needed a capital injection. KCB Kenya ended last year with a problem of really thin capital ratios they had to cut the dividend or raise capital from shareholders.
Remember when Equity acquired BCDC it did not pay a dividend that year since it also had thin capital ratios caused by many factors including the acquisition.
That is a great summary at @watesh.
Just to also add that KCB is considering an Ethiopia entry as well. They need to retain cash for all these growth opportunities.
Of my banks though; this is the one that I watch with a 'side eye'. I do wonder whether these acquisitions are done at optimal prices.
On another note, the new CEO has a point to prove. That his HR background is not a hindrance. So far he seems to be instituting the right things. A special squad has been put together to go hard on the bad loan recoveries. This squad reports directly to him.
At current prices PE is at 2.2 - extremely low for a bank that still has growth potential. If they go back to paying 3 bob dividend until they settle, this is still above 10% yield and mark you the payout ratio is less than 25%. So they have room to grow dividend considerably in future. And KCB has historically been pro-dividend and its growth. 2023 is an anomaly.
KCB has in the past also been another foreign investor 'buy'. When FI come back and if figures are looking up, they will buy KCB and price will improve. For the reasons above, I would still consider KCB at current prices.