Why CRDB Bank shareholders must wear broad smiles again

Shareholders of the CRDB Bank Plc must be wearing broad smiles as the lender’s equity price has risen by 38.4 percent during the past five months, propelled primarily by investors’ hope for lucrative returns as profitability improves further. The lender’s share price closed at Sh270 each last week, up from Sh195 in December 2020.

In general perspectives, this means that an investor who bought CRDB Bank shares in December 2020 - and sold same on Friday last week earned Sh75 as profit on every share purchased! With improved profitability, the lender’s market capital appreciated by a cool Sh195.89 billion from Sh509.31 billion that was recorded on December 31, 2020 to Sh705.2 billion as of Friday last week. Despite a low market turnover last week, CRDB Bank still stole the show by commanding 43 percent of the week’s Sh268 million turnover, partly as investors’ sentiments were buoyed by a 29.4 percent rise in this year’s dividends. On Saturday, May 22, the bank’s Annual General Meeting (AGM) approved a dividend per share of Sh22 from its Sh165.2 billion after-tax-profit for the year 2020.

Last year, the bank paid Sh17/share dividend. The Sh22/share dividend translates into a total dividend payout of Sh58 billion.

“Equities such as those of CRDB Bank merit investment because they have increased the portfolio value of shareholders - and this is good news for them,” said the chief executive officer for Zan Securities Ltd, Mr Raphael Masumbuko.

Apart from CRDB Bank Plc, other counters that registered a rise in prices were Twiga, the self-listed DSE Plc and Simba Cement, according to an analysis by Zan Securities.

The price for the former rose by 8.84 percent to close off the week at Sh3,200 per share from Sh2,940 of the preceding week while that of the DSE Plc appreciated by 1.72 percent. Simba Cement’s price was up by 1.28 percent.