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 Commercial Bank: 9M 21 – impressive results and management's 202...
We reiterate our Buy recommendation on KCB Group with an unchanged target price of KES54.0 KCB released 9M 21 results posting a 131% yoy jump in PAT, which we see as positive results. As expected, the 53% yoy decline in loan loss provision charge boosted performance. Revenue performance was poorer than expected, with fee and commission income failing to deliver the expected growth to make up for shrinking net interest margins. On the positive side, there was an improvement in asset quality,...
- Faith Mwangi
Safaricom, KCB and NCBA earnings to be boosted by strong H1 21 Fuliza ...
The value of Safaricom’s Fuliza (an M-Pesa overdraft facility) borrowings increased 25% yoy in H1 21, according to media reports. WHAT IS FULIZA? In partnership with Kenya lenders, NCBA and KCB Bank, Safaricom operates an overdraft facility dubbed ‘Fuliza’, a product that enables customers to access an unsecured line of credit by overdrawing on M-PESA to cover short-term cash-flow shortfalls, subject to an applicable pre-determined limit. Fuliza is underwritten by Kenyan lenders, NCBA and KC...
- Faith Mwangi
Kenya Commercial Bank: H1 21 – Low cost of risk and better efficiency ...
KCB release impressive H1 21 results with PAT increasing 102% yoy. The bank's performance was boosted by a decline in cost of risk to 2.2% in H1 21 from 4.0% in H1 20, and increased efficiency following a modest 7% yoy increase in operating costs. So far, management is ahead of its FY 21 targets on cost of risk with asset quality in H2 21 expected to be supported by no lockdowns and steady economic recovery. REITERATE BUY – SHARE PRICE STILL ATTRACTIVE Year-to-date, KCB group's share price ha...
- 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
Kenya Commercial Bank: Q1 21 – Flat results but future looks brighter
KCB Group released Q1 21 results with PAT up just 2% yoy. The main weakness in earnings was in non-interest income, which declined 20% yoy on account of lower fee and commission income earned by the bank. However, we expect a recovery on account of the lifting of the waiver on fees for digital transactions and increased transaction volumes on digital platforms. WE RETAIN OUR BUY RECOMMENDATION ON KCB WITH AN UNCHANGED TARGET PRICE OF KES54.00 The bank is trading at a current PB of 0.9x, which...
- 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
Kenya Commercial Bank: FY 20 earnings decline as expected; better outl...
KCB released FY 20 results with EPS declining by 25% yoy to KES6.10, which was within expectations. The bank issued a dividend of KES1.00. 2020 has been a challenging year and earnings came under pressure from cost of risk accelerating to 4.6% from 1.8% in FY 19. With NPL ratio increasing to 14.7% from 10.9% in FY 19, NPL coverage fell to 66.7% from 72.1% in FY 19. In our view, the bank will require lower cost of risk in FY 21 to return to coverage levels of 70% and above. We expect earnings ...
- 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...
- Gerald Muriuki
GENGHIS CAPITAL PLAYBOOK 2021: Navigating the Now Normal
Dear Investors,No, that’s not a typo. The theme is just what it is, ‘Navigating the Now Normal’. The COVID-19 shock upended the world last year with far-reaching consequences; an earthquake of a magnitude 9 comes closer. While the rollout of the vaccines this year are meant to be a shot in the arm (no pun intended) to global economies, we are alive to the fact that the pandemic’s scars will still linger longer. Not only has COVID-19 exposed the domestic economy’s soft spots, but the spillover e...
- Gerald Muriuki
KCB Group Plc (NSE: KCB) 3Q20 Earnings Note
KCB Group Plc (NSE: KCB) reported 43.3% y/y (+151.9% q/q) drop in 3Q20 Earnings per Share (EPS) to KES 3.39. The turn in profitability was mainly due to 244.3% y/y increase in Loan loss provisions (LLP) to KES 20.0Bn. Net Interest Income (NII) grew 10.6% y/y to KES 47.9Bn while Non-interest Revenue (NIR) fell 5.0% y/y to KES 21.3Bn. Other operating expenses remained steady (-0.2% y/y). The balance sheet grew 11.5% y/y to KES 972.0Bn driven by the 15.5% y/y rise in deposits to KES 772.7Bn coupled...
- Faith Mwangi
Kenya Commercial Bank: Q3 20: Loan loss provision charges dampen posit...
KCB's Q3 20 EPS declined 49% yoy to KES1.03, due to the cost of risk rising to 4.8% in Q3 20 from 1.7% in Q3 19, in light of weakened asset quality. On a 9M 20 basis, EPS declined 43% yoy to KES3.39. Income before loan loss provision charges increased 10% yoy, which we regard as a positive result, but non-interest income (-6% yoy) was hit by a 6% yoy decline in fee and commission income. We believe this is only a challenge for 2020, though, as we do not expect the Central Bank of Kenya (CBK) ...
- Gerald Muriuki
Genghis Cross-Asset Weekly Strategy - 9th November 2020
In this week's edition of the Weekly Cross-Asset Strategy Report, we give a recap of the equities, fixed income, currencies and derivatives markets' performance over the past week and our trading ideas for the coming week. Our Momentum, Income and Value equities portfolios continue to outperform the benchmark NSE 20 index. Performance of the Momentum and Income portfolios is ahead of all the benchmark indices including the Nairobi All Share Index (NASI) and Zamara Index.Genghis Trading Ideas for...
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.