The market was mixed as reflected by the benchmark index performance. The NASI, N10, and NSE 25 closed in the red shedding 0.1%, 0.4%, and 0.1% respectively while NSE 20 sustained its bull run for the fourth consecutive session on a 0.4% gain.
Equity turnover edged upwards, on a 20.7% growth to USD 0.8m. Activity levels were at near parity albeit skewed towards locals who accounted for 50.5% of the day’s turnover, up from 19.4% in the prior session.
Safaricom was the top-traded stock – accounting for 41.8% of the day’s turnover. The counter’s price remained unchanged as locals mopped up foreign supply.
Investors were bullish on banking stocks with KCB Group and Equity Group gaining 3.5% and 0.3% to KES 19.10 and KES 37.95 respectively.
The former was the best-performing top mover closing the day on a two-week high on rising local demand – printing 20.5% returns in the last four sessions. I&M, on the other hand, remained unchanged at KES 17.40.
KenGen was a surprise top mover trading 1.3m shares. That said, the stock shed 3.8% in the day to KES 2.31 on foreign selling.
EABL was the day’s worst-performing top mover shedding 4.5% to KES 112.50 – the lowest price since 28th June 2022.
Bamburi was the day’s best performer on a 10.0% rally to KES 26.50 while Liberty shed 7.8% to KES 3.55, closing as the leading laggard. The former has gained 17.10% since yesterday’s announcement of the sale of Hima Cement – its Ugandan subsidiary.
Foreign investors were net sellers, recording net outflows of USD 446.0K. Safaricom led the selling charge while NSE led the buying charge.
Co-op Bank has released its 3Q23 results, posting a 7.6%y/y rise in EPS to KES 3.14 with net income coming in at KES 18.4bn. The improved performance came on the back of a 2.5%y/y rise in net interest income (NII) while non-funded income (NIR) ticked up 2.1%y/y.
NII was supported by a 14.3%y/y climb in interest income from loans and advances to KES 31.8bn as the loan book grew by 12.8%y/y to KES 378.1bn.
The top-line was also boosted by a more than doubling in income from interbank lending as interbank rates surged to decade highs of 17% in 3Q23.
NIR growth was weighed down by a 25.0%y/y slide in foreign exchange income, signaling an improved FX market following interventions by the CBK to revive it, case in point, the FX code.
Deposit growth was minute, up only 0.2%y/y and down 6.7%q/q to KES 432.8bn pointing to the increased struggle by banks to attract funds, with several banks now aggressively advertising for short-term deposits. The government directive on treasury single accounts also seems to have impacted the bank’s deposits.
The bank is trading at a trailing 0.65x P/B (tangible) and a forward P/E ratio of 2.84x compared to the industry’s 0.5x P/B and 3.3x P/E. Having declined 5.8% in the past 12 months, the stock has outperformed the NASI (-29.4%) and NSE 20 (-12.0%) indices. We maintain our BUY recommendation, noting that the lender has the second-highest dividend yield amongst listed banks after StanChart, at 13.3%.