Standard Bank declares 21-cent dividend

IF you bought 1 000 Standard Bank Namibia shares last year when the company went public, you will receive a N$210 dividend in the first week of December.

Shares then were going for N$8,90, meaning 1 000 shares would have cost N$8 900.

In an announcement made last week Friday, Standard Bank Namibia said the board of directors has approved a dividend of 21 cents per share, with the last day to trade set for 13 November and the payment date for 4 December.

The early Christmas distribution is the second since the company listed on the Namibian Stock Exchange last year. The first was a dividend of 27 cents, which was paid out in May this year.

At last Friday’s trading price of N$6,95 per share, the interim dividend yield is 3%, and if taken at the initial public offering (IPO) price of N$8,9 it would be at 2,3% only.

A dividend yield indicates how much a company pays out in dividends each year relative to its share price. A higher yield is what investors are always looking for, provided it is not because the share price crumbled.

Standard Bank Namibia shares have, however, fallen almost N$2 below the IPO price, and analysis has indicated that the possibility of it climbing in the near future is small.

This then also means the 3% dividend yield as indicated above was largely aided by the drop in the share price and not really due to better performance.

This interim dividend will be tax free for Namibians, and 10% tax will be imposed on payments to non-residents.

The bank released its interim financials in September. It posted a profit of N$228 million, and other notable figures such an interest income of N$630 million. Both profits and interest income was low when compared to 2019.

The loan book has decreased by about N$871 million over the six months, while non-interest revenue has dipped to N$587 million from N$608 million recorded in 2019.

This, Standard Bank said, was due to a decrease in volume-based fees because of Covid-19’s impact.

Assets were at N$34,6 billion – mainly in gross loans and advances at N$24,7 billion, and financial investments at N$5,2 billion.

Deposits stood at N$26,4 billion.

Last month, Standard Bank Namibia redeemed its N$200 million bond for 2020. Next year, another N$1,27 billion bill for bonds redemption will be forked out between May and July.

The Namibian understands that Standard Bank Namibia largely leans on its mother company, the Standard Bank Group, in South Africa. Its credit rating is shadowed there and the Namibian entity enjoys this advantage.

The Bank of Namibia in early September told The Namibian that it had requested commercial banks to be prudent this year, as Covid-19-imposed restrictions have mercilessly ravaged economic activities both locally and globally – and banking activities were no exception.

The call was for commercial banks to restrict payouts of dividends and bonuses to executives this year.

This, it says, would allow “to build up capital reserves to help absorb anticipated losses”.

It has been thrown around that banks should brace themselves for high records of loan defaults this year, and this will need to land on solid buffers, hence the bank’s call.

Standard Bank’s interim, though, is surprisingly more than that of what Capricorn Group Limited, which declared only 20 cents recently, although having earned way better profits in the six months ending June 2020.

Email: lazarus@namibian.com.na

Twitter: @Lasrus_A

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