Safaricom Kicks Off The Week As The Top Traded Stock, Accounts For 61%

The market opened the week on a bullish note with the NASI, the N10, the NSE 20, and the NSE 25 gaining 3.2%, 2.9%, 1.5%, and 2.8%, respectively.

Equity turnover more than quadrupled to USD 22.7m (+227.3%) with foreign investors dominating market activity at 67.5% of the day’s turnover levels up from 41.8% in the prior session.

Safaricom was the top traded stock in the day accounting for 61% of the day’s turnover. The counter gained 5.1% to KES 17.60 – on profit taking by foreigners.

Banking stocks dominated the day’s top mover chart with I&M gaining 8.6% to KES 22.65, closing as the day’s top gainer. Similarly, KCB Group and ABSA gained 6.5% and 0.4% to KES 27.20 and KES 14.05 respectively. Co-op Bank remained unchanged at KES 14.90.

I&M led the top gainers on an 8.6% rally to KES 22.65 while NBV shed 7.1% to KES 2.37 – closing as the leading laggard.

Foreign investors remained bullish with net inflows of USD 6.9m. Safaricom led the buying charge while Equity Group led the selling charge.

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In the news

I&M Group Plc posted its FY23 earnings, marking a 12.7%y/y rise in EPS to KES 7.63 with net income attributable to shareholders coming in at KES 12.6bn.

The rise in net income was mainly due to a 24.8%y/y growth in net interest income (NII) to KES 28.6bn while non-interest revenues (NIR) rose 10.4%y/y to KES 14.1bn, translating to a double-digit topline of 19.7%y/y to KES 42.7bn.

Net interest income (NII) was buttressed mainly by a 38.9%y/y rise in interest income from loans and advances to KES 36.5bn on upward loan repricing as well as on the 30.5%y/y loan book growth.  Earnings from government securities and other interest-bearing revenue channels (inclusive of interbank) grew 14.1%y/y and KES 230.9%y/y to KES 12.0bn and KES 2.0bn, respectively. Yields on loans and government securities both grew by 160bps to 13.3% and 10.4%, respectively.

NIR was mainly bolstered by fees and commission income that grew 16.7%y/y to KES 6.9bn and foreign exchange income reported at KES 5.5bn (+8.8%y/y). Other income, however, declined 5.4%y/y to KES 1.7bn. Operating expenses (OPEX) before impairments were up 26.4%y/y to KES 20.3bn driven by a 42.3%y/y rise in other costs as well as an 11.0%y/y rise in staff costs.

From a subsidiary viewpoint, Kenya remains the key balance sheet and bottom-line driver, accounting for 76% of the period’s profit before tax (PBT) and 70% of FY23 assets. The Rwandan subsidiary follows at 12% PBT and 15% of FY23 total assets. Tanzania, Uganda, and Mauritius closed 2023 accounting for 2%, 3%, and 8% of PBT respectively.

The group posted a KES 12.6bn (+12.7%y/y) after-tax profits on the deduction of minority interest and the period’s KES 3.3bn tax charge on the KES 16.7bn (+11.3% y/y) profits before tax. The board of directors has recommended a KES 2.55 first and final per share dividend to be paid on or about 24th May 2024 with a book closure date of 18th April 2024.

The group’s liquidity ratio declined 143bps to 44.70 – though 24.70% above the minimum statutory ratio. Similarly, the total capital to total risk-weighted assets declined from 20.52% in FY22 to 18.90% in FY23 as total risk-weighted assets grew faster (+27.1%y/y) than core capital (+13.4%y/y).

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