reports
- Faith Mwangi
Kenya Banks: Sector Q3 21 PBT jumps 68% yoy, and outlook for Q4 is pos...
Kenya banks' sector-wide profit before tax (PBT) grew 68% yoy in Q3 21, according to the latest data from Central Bank of Kenya. On a cumulative 9M 21 basis, PBT increased 63% yoy. Of our covered banks that have released results, KCB Group leads the pack with a 131% yoy jump in 9M 21 PAT, Equity Group comes in second with a 78% yoy increase and Co-op Bank comes in third with a 19% yoy rise. Some key trends in Q3 21 earnings performance include: 1. Improved asset quality with industry NPL rati...
- Faith Mwangi
Kenya banks: Lucrative SME potential undercut by low yields and asset ...
The Central Bank of Kenya (CBK) has released a new study on small and medium-sized enterprises (SMEs), already an important sector for Kenyan banks but one with a great deal of growth potential. Our key takeaways on what the report means for the banks we cover: 1. SME SEGMENT ACCOUNTS FOR 20% OF INDUSTRY LOANS, BUT THERE IS UNTAPPED POTENTIAL The management teams of the Kenyan banks we cover argue that the SME sector is the next growth frontier. In our view, though, the majority of their loan...
- Faith Mwangi
Kenya banks: Profit before tax up 97% yoy in first two months of Q2
According to the latest data from Central Bank of Kenya, the country's banks recorded a 97% yoy increase in profit before tax (PBT) for the first two months of Q2 21 (April and May). In the first five months of 2021, PBT increased 42% yoy, which is still a strong performance for the banks. We believe the performance was mainly on the back of three factors: 1. Lower provision charges given that Q2 20 saw banks accelerate their cost of risk to counter the asset quality weakness related to Covi...
- Faith Mwangi
Kenya Tier 1 banks benefit from agency banking surge; Equity Group lea...
According to new Central Bank of Kenya (CBK) data, total agency banking transaction value in H1 21 grew by 52% yoy to KES3.3bn. This was on the back of a 10% yoy rise in registered mobile money accounts to 67mn and a 23% yoy increase in overall agency transaction numbers. The growth in overall transaction values tallies with the continued shift to digital transactions that the pandemic has accelerated. The value per transaction increased by 11% yoy to KES3,029, boosted by clients increasingly...
- Faith Mwangi
Kenya banks: Four ways M&A could transform the sector
In the final report of our series on mergers and acquisitions in Kenya banks – we previously traced its history and concluded that the country is overbanked relative to African peers – we examine the banks we believe would be targets for M&A deals going forward.
- Faith Mwangi
The fourth wave of Kenyan M&A: Lessons from Nigeria and Ghana
Recently, we looked at the history of mergers and acquisitions in the Kenyan banking sector and the coming "fourth wave"; in this report, we examine what the processes of consolidation in Nigeria and Ghana can tell investors about what to expect in Kenya. Relative to other major economies in Africa, Kenya is over-banked, which supports our view that consolidation activity is likely and desirable. By our estimates, if Kenya is to match its peers in the list of the biggest 10 African economies,...
- Faith Mwangi
The complete history of M&A in Kenya banks – the fourth wave is here
In this new series of reports, we consider the theme of mergers and acquisitions in the Kenyan banking sector. In the past decade, there has been a notable increase in consolidation and in this first report in the series, we trace the history of mergers and acquisitions in Kenya banks and identify the drivers of future consolidation activity. Kenya has been through three significant phases of mergers and acquisitions, which were mainly prompted by bank failures. We believe we are now in the f...
- Faith Mwangi
Kenya banks: Strong rebound in Q1 as profits surge by 20%
According to data from the Central Bank of Kenya, banking industry PBT increased by 20% yoy in Q1 21. On a qoq basis, PBT increased by 94%. According to the regulator, there was a slight decrease in income (5% qoq), which we believe is largely related to lower loan yields in the quarter. Earnings were boosted by a decrease in expenses by 23% qoq, which we believe was related to lower loan loss provision charges. Overall, the industry ROE was 22.0% in March 2021 compared to 20.4% in March 2020...
- Faith Mwangi
Kenya banks: Regulator ends Covid restructuring regulations, as expect...
The Central Bank of Kenya announced that it will not be extending the regulations allowing restructuring of loans. The allowance to restructure was implemented in March 2020 and it allowed banks to save on capital as some borrowers facing weakness could be extended moratoriums and restructured loans which reduced the need to make loan loss provisions for them. The end of this allowance was expected, in our view. On the downside, we expect NPLs to tick up as from Q2 21, driven by restructured ...
- Faith Mwangi
Stanbic Holdings (Kenya): FY 20 – Weak performance, but bank still pay...
Stanbic released FY 20 results with PAT down 19% yoy. The bank also issued a DPS of KES3.80, which was a pleasant surprise. The main factor dragging down earnings was a 55% yoy jump in loan loss impairment charge. This was expected given the weakened economic environment on account of the impact of lockdowns and closure of businesses due to Covid. Management, however, believes the bank is adequately covered and does not foresee a further spike in cost of risk in 2021. Non-interest revenue fel...
- Ayobami Omole
- Faith Mwangi
Kenya: New data show soaring digital payments
The Central Bank of Kenya (CBK) released digital transaction data for both banks and telcos in 2020, showing strong growth in digital payments and a decline in card transactions. In this report, we use the data to compare digital transactions in Kenya between July 2019-March 2020 (pre-pandemic) and April-December 2020. This allows us to assess the impact of the regulatory changes in March 2020 when fees on transactions were reduced and the upper limit on transactions increased. OUR KEY OBSERV...
- Faith Mwangi
Kenya banks: Profits fall by 29% in FY 20 on weak asset quality
According to data from the Central Bank of Kenya, total banking industry PBT fell by 29% yoy in FY 20. On a qoq basis, PBT fell by 19%, which we believe was related to accelerated cost of risk given weaker asset quality. This is not entirely unexpected considering that out of the banks we cover (which account for about 65% of total industry profit), four of them have issued profit warnings (signalling PAT in FY 20 will fall by more than 25% yoy). The banks that have issued profit warnings are...
- Faith Mwangi
Stanbic Holdings (Kenya): H1 20 earnings disappoint on higher loan los...
Stanbic Holdings (Kenya) released H1 20 results with EPS declining by 37% yoy to KES6.46. The weak performance was driven by: higher loan loss charge (+61% yoy), which was expected on the back of a weaker economic environment; a decline in net interest margin following cuts in the central bank rate on which some loans are attached; a 19% yoy fall in non-interest income as some key one-off incomes from deals made in H1 19 were absent and a higher tax charge of 38% (up from 27% in H1 19). We ha...
- Faith Mwangi
Kenya: Restructured loans escalate as Covid-19 bites; negative for ban...
According to the Treasury Cabinet Secretary, Kenya banks have restructured a total of KES360bn in loans as at June 2020. This represents 13% of total loans and is an increase from the 9.6% reported by the Central Bank of Kenya in April. Of these, personal household loans accounted for 53% of total loans restructured against a backdrop of continued job losses and pay cuts as well as shutting down of key employment sectors including tourism and horticulture from the Covid-19 outbreak. This is n...
- Faith Mwangi
Kenya's largest banks restructure 7% of loans – negative
According to the Central Bank of Kenya, the 7 largest banks in Kenyahave restructured loans amounting to KES176bn in April 2020 (7% of total loans as at January 2020)following the Covid-19 policy response that called forloan extension and restructuring. This is higher than the 3% in March. Excluding Standard Chartered Bank, we cover 6 out of the 7 largest banks in Kenya that include KCB, Equity, Co-op, NCBA (NIC bank and CBA group), ABSA Kenya (formerly Barclays) and DTB.We view the news as n...
- Patrick Mumu
2019 Banking Sector Report
Executive Summary We recommend a HOLD on the banking sector. We note that the challenging business environment, occasioned by regulatory constraints, coupled with weakened asset quality, serve as impediments to growth. There still exists uncertainty with the interest rate cap ceiling. Our top pick in the sector is KCB Group with a Target Price of KES 62.52 and potential upside of 39.6% from the current market price. The bank is currently trading at the sector average of 1.2x P/B, despite having...
- Patrick Mumu
Stanbic Holdings Plc FY18 Earnings Update
Stanbic Holdings Plc (NSE: CFC) released FY18 financial results reporting a 45.7% increase in EPS to KES 15.88 in line with expectations. The performance was buoyed by Non-interest Revenue (NIR) that grew 18.3% y/y to KES 9.96Bn, coupled with Net Interest Income (NII) that grew 14.0% y/y to KES 12.13Bn. Operating expenses were kept in check (1.7% y/y) while credit impairment charges declined 25.2 y/y to KES 2.06Bn. The balance sheet grew 16.8% y/y driven primarily by the loan book which rose 8.7...
- Gerald Muriuki
- Patrick Mumu
Kenya Banking Sector Report 1H18 – Weakened but Resilient
EXECUTIVE SUMMARY In this report, we assess the recent developments in the Banking sector, the direction going forward and provide a valuation update on the trading counters in our coverage. Valuation Update We update our coverage of the banking sector to capture performance under a new reporting environment (IFRS 9), given the release of 1H18 results and provide an update on emerging sector issues since our last coverage. We maintain our HOLD recommendation on the banking sector. We note th...
- Patrick Mumu
Stanbic Holdings Plc 1H18 Earnings Update
Stanbic Holdings Plc (NSE: CFC) released 1H18 financial results reporting a 104.5% increase in EPS to KES 8.99 from KES 4.39 in 1H17. The increase was buoyed by Non-interest Revenue (NIR) that grew 34.0% y/y to KES 5.57Bn, coupled with Net Interest Income (NII) that grew 11.9% y/y to KES 5.61Bn. Operating expenses grew 11.4% y/y while credit impairment charges declined 86.1% y/y to KES 0.25Bn. The balance sheet grew 19.0% y/y driven primarily by the loan book which rose 15.4% y/y (7.5% h/h) as t...
Ford Equity International Rating and Forecast Report
Ford Equity International Research Reports cover 60 countries with over 30,000 stocks traded on international exchanges. A proprietary quantitative system compares each company to its peers on proven measures of business value, growth characteristics, and investor behavior. Ford's three recommendation ratings buy, hold and sell, represent each stock’s return potential relative to its own country market.. The rating reports which are generated each week, include the fundamental details behind...
Unfortunately, this report is not available for the investor type or country you selected.
Report is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.