Turnover Dips To 813 Million Shillings On Monday

Turnover dipped to 813 million shillings in the previous session as effects of the tighter money market were felt by the market. We expect this trend to hold in Monday’s session.

The regulator came into the market Monday to mop-up despite a rising overnight rate and tighter money market. This is an indication that their focus is on managing the exchange rate and if the current trend continues we may see it begin to affect the shorter-end of the curve.

The shilling closed at 102.4 and market analysts expecting the local currency to remain range-bound on Tuesday.

I&M Holdings

I&M Holdings Plc (NSE: I&M) announced a 13.8 percent y/y growth in 3Q18 profit after tax to 5.9 billion shillings. The increase was buoyed by Non-Interest Revenue which grew strongly at 38.4 percent y/y to 5.6 billion shillings which countered the decline in Net Interest Income (NII) (4.2 percent y/y) to 10.3 billion shillings.

Consequently, operating income was up 7.4 percent y/y to 15.8 billion shillings. Total operating expenses were muted (+1.7% y/y) at 8.2 billion shillings mainly attributed to a 25.5 percent y/y decline in Loan Loss Provisions (LLP).

Staff costs grew 10.5 percent y/y while other operating expenses rose 18.3 percent y/y. Deposits grew 26.4% y/y while the loan book expanded by 9.8% y/y to KES 163.3Bn. We recommend a BUY on I&M at a target price of KES 113.67. This represents an upside potential of 34.1% from the current market price of KES 84.75.

Trading Expectations

Turnover in the previous session ticked up slightly from Friday’s session to 686.5 million shillings. As expected, trading centered on the key index counters; Safaricom, Equity and KCB and in addition, EABL and I&M Holdings.