MKCB shares surge 80pc on dividend, earnings

DAR ES SALAAM: MKOMBOZI Commercial Bank (MKCB) shares have rallied 80 per cent year-to-date to 1,010/-, making it one of the top performers on the Dar es Salaam Stock Exchange (DSE).

The rally underscores a revival in investor sentiment, driven by improved earnings and the reinstatement of dividend payments after a prolonged suspension.

A pivotal development came with the board’s decision to resume dividend payments, marking the first such move in six years. The declared dividend of 92/40 per share translated into a yield of 14.44 per cent based on the prevailing market price of 640/-, offering investors a tangible return and a signal of renewed financial stability.

MKCB Managing Director Respige Kimati (pictured) told ‘Daily News’ that the strong performance stems from a focused strategy on sustainable growth and cost efficiency to maximise shareholder returns.

“The bank’s financial performance continues to improve, driven by the successful implementation of our growth strategies. “We have made strategic investments in key products and delivery channels, allowing us to expand our customer base and deepen product penetration,” Mr Kimati said.

Mr Kimati also pinpointed the importance of disciplined financial management, enhanced credit quality and strategic market positioning in the bank’s success.

The Vertex International Securities, Advisory and Capital Markets Manager, Mr Ahmed Nganya, said the bank demonstrated significant financial growth in the first quarter of this year with profit before tax jumped up by 52 per cent to 4.7bn/- from 3.1bn/- in similar quarter last year.

“This impressive growth reflects the bank’s strengthened revenue streams and effective management strategies,” said Mr Nganya.

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Additionally, the bank’s operational efficiency has improved markedly, with the cost-to-income ratio dropping to 43 per cent, representing a 25 per cent enhancement.

“This improvement indicates that MKCB is optimising its cost structure to drive better profitability and sustainable business growth,” Mr Nganya said.

This dividend yield is notably higher than what is typically offered even by first-tier banks in the region, underscoring MKCB’s renewed financial strength and commitment to delivering value to its investors.

Orbit Securities Mwanza Branch Manager, Mr Justine Amos said the bank outstanding year-to-date performance was driven by a combination of strong earnings, improved loan quality, resumption of dividends, undervalued stock metrics and renewed investor confidence.

“One of the most significant markets moving developments was MKCB’s decision to resume dividend payments after six years. “And, if current momentum holds, MKCB may remain a top pick for income and growth focused investors in the second half of this year,” Mr Amos said.

Last year the bank asset quality also improved significantly, with the Non-Performing Loan (NPL) ratio dropping to 4.2 per cent, a major improvement from 8.0 per cent in the previous year and now comfortably below the Bank of Tanzania’s 5.0 per cent benchmark.

“This improvement came alongside loan portfolio growth, demonstrating that the bank was not only expanding its lending operations but also doing so responsibly,” Mr Amos said.

Also, total assets grew by 10 per cent year on year to reach 282.38bn/- and the bank’s Net Interest Income (NII) rose to 40.56bn/-, reinforcing its core banking performance. The cost to income ratio also improved to 46 per cent, showing better operational efficiency.

MKCB’s Return on Equity (ROE) stood at 29 per cent, an impressive figure that reflects strong profitability relative to shareholder capital.