NAIROBI – Kenya’s central bank will have to approve any plans by commercial lenders to issue dividends for this year, it said in a memo to bank executives seen by Reuters on Monday, an unusual move caused by the coronavirus crisis.
Lenders in the East African nation have seen their earnings plunge in the first half of this year, hit by higher provisions for bad loans, on the back of the COVID-19 pandemic.
They have also had to restructure more than a quarter of total customer loans, to provide relief to individuals and firms hit by the disruptions.
All lenders are required to resubmit their internal capital adequacy assessments by the end of October, the central bank said in the memo, reflecting the impact of the pandemic.
They will also be expected to discuss their plans with the regulator, before making decisions on distribution of profits to their shareholders, the memo said.
“The duration and extent of the pandemic remains uncertain and it is critical that these institutions remain resilient by strengthening their balance sheets,” the central bank said.
Reporting by Duncan Miriri; Editing by Toby Chopra