The Barclays Bank of Kenya’s Investment Journey: The Best Time to Bet on Their Shares

Kenya’s Banking Sector

There has been a lot of talk about the banking sector in Kenya. With all the talk, consumers and investors have often been left in a limbo of where they should turn to either to invest or keep their money.

Some say that with a population of slightly above 50 million, and with more than 40 banks, Kenya is overbanked. Some, however, feel that Kenya is not overbanked but lacks the strategies that can help her harness all the potential that lies in the banking sector.

The coming of the interest rate capping law was seen as a move to help Kenyans have access to affordable loans from Kenyan banks. Before the coming into force of the law, the interest rates had gone through the roof to as high as 20 percent in some banks.

The law, however, seems to have failed to deliver on its primary objective as Kenyan banks increasingly keep off from lending to most Kenyans whom they consider ‘risky.’

Majority of the banks prefer lending to the government and investing in Treasury Bonds than lending to Kenyans and the SME sector has received the most heat.

Investing in the Banking Sector

The closest most Kenyans come to interacting with a bank is either when they want to deposit cash, withdraw cash or ask for a loan.

What most Kenyans don’t know is that there are amazing investment opportunities that lie in Kenya’s banking sector. For instance, there are banks that have savings accounts that have great rates annually. Chase Bank, for instance, had the Origin Savings account that gave one a return of up to 13.1 percent annually.

A savings account with better returns is perfect for someone with long-term investment goals and one whose money is not tailored towards urgent spending on either business or project.

Barclays Bank of Kenya has an amazing product known as Zidisha Bonus Account that gives one up to 70 percent rate annually of the Central Bank of Kenya rate (CBR) and a bonus on 0.25 percent annually on the savings.

If you have some money somewhere that you do not necessarily need to use, instead of letting it lie somewhere in a deposit account, you may think of moving it to a savings account.

Just the same way you shop for a good shop that will give you better prices for quality products, it is also prudent to ‘shop’ for a better bank that has good returns. I would whisper to you to try out Barclays Bank of Kenya on this one.

Investing in Banking Shares

Most Kenyans are often reluctant in investing in shares in various companies for two major reasons:

1. Inadequate information on how and where to invest when it comes to shares
2. The fear of the unknown for most fear of the losses even before they try it out.

In the recent past, most companies that trade at the Nairobi Securities Exchange have been issuing profit warnings and running into losses, something that has always scared away those interested in investing in shares.

Question: how many banks trading in shares have you heard issuing profit warnings? One? Two? None? Almost none. The fact that most Kenyans looking to invest in shares don’t know is that banks rarely make losses in Kenya and, therefore, the perfect venture to place your money as an investment.

Allow me to use Barclays Bank of Kenya because they were open enough to allow me to use their information. Something to learn, always be ready to work or invest in a company that is open to information.

So far, Barclays Bank of Kenya has issued 5,431,536,000.00 worth of shares with a market capitalization of 61,647,933,600. Now the best way to invest in shares of any company is to have a look at their profit history. Has the company been making profits? This should always be your first question.

For the year 2017, Barclays Bank of Kenya recorded 6.93 billion shillings in profits after tax. This was, however, a slight drop from 7.3 billion shillings in profits in 2016. The lender closed the year with a loan book of 168.4 billion shillings, similar to 2016 with the customer deposits increasing by 4.4 percent to 186 billion shillings.

During the first quarter of 2018, the lender registered a profit of 1.8 billion shillings, an increase from 1.7 billion shillings at the same time in 2017 with an investment in the Treasury Bills increasing by 52 percent to 67 billion shillings.

What is the share price of Barclays Bank of Kenya?

The next thing you should look at before investing in any shares of any company is the share price. How consistent is the average share price? Has it been increasing? Has it been reducing? When was it at its lowest? When was it at its highest?

Between the month of January 2018 and June 2018, the average share price of Barclays Bank has been relatively stable. In January, the average was at 10.03 shillings per share, increased to 10.7 shillings per share in February.

The lowest average share price for the lender this year was at 10.03 shillings per share in January while the highest stood at 13.02 shillings per share in April.

The image below shows the average share price for Barclays Bank of Kenya between January 2018 and June 2018: