{
  "id": 9194374,
  "title": "Why your bank may pay you less dividend even when it makes more profit",
  "url": "https://urgent.news/2026/09/22/why-your-bank-may-pay-you-less-dividend-even-when-it-makes-more-profit",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-22T20:39:14.000Z",
  "source": {
    "name": "People Daily Kenya",
    "slug": "people-daily-kenya",
    "url": "https://peopledaily.digital/business/why-your-bank-may-pay-you-less-dividend-even-when-it-makes-more-profit"
  },
  "original_language": "en",
  "account": "With larger profits potentially not leading to bigger dividends for shareholders, the Central Bank of Kenya (CBK) is implementing rules to make banks retain more earnings as a safeguard against future losses. This affects Kenyans who own bank shares or invest through funds that rely on dividends as a source of income. Kenyan banks paid Ksh117.2 billion in dividends last year, making up almost half of the Ksh245.9 billion paid by all listed companies. The CBK rules could alter how banks distribute profits between shareholders and the business. Banks with CET1 capital below 8.625 percent of risk-weighted assets would retain all earnings, while those with CET1 between 8.625 and 9.25 percent would retain at least 80 percent, and so on. The retention requirement falls to 40 percent for banks with CET1 between 9.875 and 10.5 percent. Once above 10.5 percent, banks would not face restrictions on dividend distribution, subject to other capital requirements. In essence, a bank may generate more profit but have less available for shareholders if its capital buffer is insufficient. CET1, mainly made up of ordinary shareholders’ equity and retained earnings, provides a buffer against losses. Banks need enough capital to absorb losses when borrowers default and to support their balance sheet expansion. The CBK's aim is to strengthen banks' resilience, reduce the likelihood of taxpayer support for failing lenders, and decrease the probability of failure. For shareholders, the immediate effect is that money retained inside the bank cannot be paid as dividends. This does not mean the money is lost; it remains part of the bank’s capital for future lending and expansion. Individual banks' decisions reflect this trade-off. Equity Group reported a 31.5 percent increase in profit but did not declare an interim dividend, as it chose to retain capital for expansion. Investors must consider the bank's profit alongside its CET1 ratio, risk-weighted assets, capital buffers, and dividend payout. The question is no longer just about how much profit a bank made but how much of that profit the bank can safely give you.",
  "summary": "A bigger bank profit may no longer automatically translate into a bigger dividend cheque for shareholders as the Central Bank of Kenya (CBK) moves to make lenders retain more earnings as a cushion against future losses. This matters to Kenyans who own bank shares directly or through investment funds and rely on dividends as a […]",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}