Standard Bank Malawi has suffered a 0.6 percent share price knock on the shares market to K395, a week after the bank posted a 52 percent jump in earnings to K12 billion (US$29 484 029).
Market analysts have attributed the slight drop in the bank’s share price on the Malawi Stock Exchange (MSE) to investors’ reaction on the decision not to pay a final dividend in the year ended December 2013.
“In essence, the bank’s share price was supposed to have been attractive. But since the bank has indicated that it will not pay out a final dividend, investors are rather cautious,” said the analyst.
Even when the bank reported a significant jump in profit, the bank announced that it will not pay a final dividend, arguing it needs the current capital base to meet regulatory capital requirements under Basel II and also for its growth prospects.
Standard Bank, one of the blue chips on MSE, will not be alone in the management of dividend as NBS Bank earlier indicated it will be moderating dividend payment to retain more equity.
The Reserve Bank of Malawi (RBM) rolled out the second of Basel accords which are recommendations on banking laws and regulations on January 1 this year to ensure that all the country’s banks meet the regulatory capital adequacy requirements.
The bank’s share price downturn, pushed down the overall measure of market performance, Malawi All Share Index (Masi) and the domestic share index by 0.1 percent to close the week at 12 650.25 points and 9 945.39 points respectively.
In the week under review, the market registered trading activity in eight counters, Illovo Sugar (Malawi) Limited, National Bank of Malawi, NBS Bank, National Investment Trust Limited, Mpico Limited, TNM plc and OML plc.
Analysts say despite no share price gain, demand is still on the rise for most of the counters.