Despite posting a 39% increase in net earnings to Sh1.03 billion in 2008, Kenya’s NIC Bank opted to offer a lower dividend to its shareholders of Sh0.25, compared to Sh0.80 the previous year–a sign that the bank is keen on retaining cash, as well as a realization that  the coming year will be hard one for their shrinking loan books, according to analysts.

The bank’s plan to retain most of its profits comes on the heels of an “acquisition spree” last year, when it purchased a brokerage firm and a stake in Tanzanian bank.  A lower dividend, coupled with the issuance of a bonus “scrip” or capitalization issue (one share for every 10 ordinary shares held), will cushion capital reserves through earnings retention, said NIC’s chairman, James Ndegwa.