KCB’s Price Remains Unchanged Despite 13% Increase in PAT

Equities

Dwindling performance in today’s trading session as all indices slid reversing previous day’s gains. The NSE-20 share index diminished 0.44% to 3464.48 points while the NASI dipped 1.31% to 143.39 points.

The NSE-25 share index cutback 34.99 points to 3937.55 points from 3972.54 points. Market capitalization followed suit, losing by 1.31% to close at KES. 2.065Tn, as equity turnover plunged by 57.85% to 364.44Mn. The market breadth illustrated the indices performance as 18 stocks declined and only 14 advanced, emphasizing a 0.78x ratio.

 Kenya Commercial Bank Ltd (NSE: KCB) announced its HY16 results whereby pre-tax earnings advancing 14.33% to KES 15.09 Billion from KES 13.20 Billion in HY15. Net interest income shored up 15.85% to KES 22.53 Billion from KES 19.45Bn in HY15 buoyed by a 22.37% increase in total interest income. Interest expense, on the other hand, went up 42.15% to KES 9.11Bn from KES 6.41Bn same period last year.

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Non-interest income however recorded a 7.71% decline to KES 10.40Bn from KES 11.27Bn in HY15, the downswing attributable to a 5.41% decrease in fees and commission on loans and advances and a 21.74% decline in forex income. Operating expenses rose by a marginal 1.84% y-o-y to KES 17.83Bn from KES 17.51Bn supported by the groups cost management strategies. Loans and advances went up 8.36% to KES 347.4Bn. Customer deposits went down 2.17% to KES 433.42Bn largely due to South Sudan currency devaluation.

Currencies

On Thursday the Kenyan shilling bucked the trend and shored up significant gains against seven of the eight currencies in its basket. Market sentiment was dominated by the Bank of England’s decision to cut interest rates, for the first time since March 2009; a decision that came a day after survey data indicated that the U.K economy is sliding into mid recession.

Today, the BoE cut rates to a record-low of 0.25% and boosted its quantitative easing program by GBP 60Bn; in a bid to resume its multi-billion-pound program of government bond purchases. On the day the GBPKES pair rallied by 0.06%, as we expect the impact to be more visible in the following trading day.

Across the pond, the local currency rallied by a mere 0.01% against the US Dollar as the latter found it difficult to be buoyed by upbeat private sector jobs, amidst sentiment that the Fed’s credibility remains low. On the local front, the shilling garnered a 0.82% gain against the South African Rand. This is despite the Rand hitting a 9-month high due to a plethora of sentiment boosters; most notably election results trickling in (which showed the smooth running of local government, despite a more contested election) and depressed international interest rates.