By Dipo Olowookere
Shareholders of United Bank for Africa (UBA) have applauded the board for its decision to reduce the dividend payout for the 2020 fiscal year, saying it was in the best interest of the company.
Last month, UBA announced the payment of 35 kobo final dividend instead of the 80 kobo it paid in the 2019 financial year. This did not go down well with some of the investors, who felt the lender should have done better, considering that two of its peers, GTBank and Zenith Bank increased their cash rewards in the same period despite the global COVID-19 crisis.
Bank explains why
Last week, the bank held its Annual General Meeting (AGM) and the Group Managing Director/Chief Executive of UBA, Mr Kennedy Uzoka, used the occasion to explain to shareholders why the board decided to slice the dividend payout.
According to him, it was mainly to further strengthen the business as much of the profit made by the company last year would be reinvested into the business to make it continue to perform optimally and prepare for unforeseen challenges.
However, he assured that, “Given the trajectory and the resilience of our business, we can assure you that we will meet and surpass the expectation of you our shareholders.”
He explained that the company has “recalibrated our business structure, starting from Lagos and extending to the South-South. We have bolstered them with the necessary leadership to achieve our aim. We believe that with these measures we have put in place, our Nigerian business will give the rest of Africa a good fight.”
Shareholders react
Based on his explanation, shareholders of UBA commended the board and management for the foresight, noting that it was the right thing to do for greater value for investors.
However, they advised the team to be prudent in the management of resources to achieve the aims and objectives of the organisation.
A respected shareholder in the Nigerian stock market, Mr Nonah Awoh, said the management can do this by enhancing other subsidiaries with the needed resources to perform even better in the current financial year.
On his part, Mr Sunny Nwosu, another shareholder, urged the board to use the available resources to increase performance for shareholders to enjoy juicier rewards.
At the meeting, investors approved the 35 kobo dividend recommended by the board.
Adedapo Adesanya