Tight liquidity dashes CRDB dividend payout

CRDB Bank shareholders’ hope to receive handsome dividend has been dashed out by financial crunch that hit the economy due to monetary policy change last year.

The bank’s board of directors proposed a dividend of 10/- per share in 2016, which was a drop of slightly over 40 per cent compared to 17/- in 2015. CRDB Board Chairman, Ally Laay, attributed the dividend amount fall to challenges the bank and the industry as whole went through last year.

“The deteriorating financial market conditions—tight liquidity, rising interest rates and default rates across all segments, affecting the bank achievements,” Mr Laay said. In 2016, the bank, largest in term of balance sheet, posted a pretax profit slow downed by 37 per cent to 118bn/-, while nonperforming loans ratio remained high at a challenging rate.

The chairman said the dividend issued was as the policy directive of 35 per cent of total net profit, which translates to 26.1bn/- worth of dividends in 2016. “Though our dividend per share went down by earnings per share for the same year was 28/37…still reasonable and the bank is sold financially,” Mr Laay told reporter yesterday. However, the Annual General Meeting, expected to meet late next month, will approve the amount of 10/- a share.

CRDB share yesterday closed the market trading 185/- a piece. Mr Laay said the bank had to take quick measures to fill the gap occurred after the government move of depositing all of institutions funds to a single treasury account at Bank of Tanzania.

“The board approved additional borrowings to fill a funding and liquidity gap of slightly higher that 500bn/- created by government decision,” Mr Laay said.

Other approval measures were reviewing credit policy and limits with a view to reduce single borrower/ sector concentration risk, full automation of the loan management process, including loan origination, appraisal, approval, monitoring and collection.

Mr Laay said because of the bank credibility and good performance managed to obtain less expensive funds from international organisation, which enable to continue financing customers.