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21/08/2023

On our Focus this week, we analyzed the financial performance of the REITs and identified the key factors that shaped the performance of the sector following the release of the H1’2023 results by all four authorized Real Estate Investment Trusts (REITs) in Kenya.

The report themed “Strategic Financial Sustainability of Kenyan REITs Redefining Real Estate Investment” discusses the background and structure of REITs in Kenya, assesses the financial performance of the current REITs in the market during H1’2023 in terms of operational metrics, profitability metrics, leverage ratios, liquidity ratios and valuation metrics. We also highlight the outlook regarding our expectations for the REITs sector going forward.

Click the link below to read our full Topical: https://t.ly/bCBUs

In the just released H1’2023 financial results, Co-operative Bank recorded a 5.9% increase in Profit After Tax (PAT) to ...
18/08/2023

In the just released H1’2023 financial results, Co-operative Bank recorded a 5.9% increase in Profit After Tax (PAT) to Kshs 12.1 bn, from Kshs 11.5 bn recorded in H1’2022.

The performance was mainly driven by a 4.0% increase in Non-Interest Income to Kshs 13.8 bn in H1’2023, from Kshs 13.3 bn recorded in H1’2022, coupled with a 2.3% increase in Net Interest Income to Kshs 21.5 bn from Kshs 21.1 bn recorded in H1’2022.

The performance was however weighed down by a 12.6% increase in staff costs to Kshs 8.0 bn in H1’2023, from Kshs 7.1 bn in H1’2022.

This week, T-bills were oversubscribed for the second week consecutively, with the overall subscription rate coming in a...
17/08/2023

This week, T-bills were oversubscribed for the second week consecutively, with the overall subscription rate coming in at 186.2%, albeit lower than the oversubscription rate of 199.7% recorded the previous week.

Investors’ preference for the shorter 91-day paper persisted, with the paper receiving bids worth Kshs 38.2 bn against the offered Kshs 4.0 bn, translating to an oversubscription rate of 955.7%, albeit lower than the 1044.6% recorded the previous week.

The subscription rate for the 364-day paper increased to 25.9% from 9.0% recorded the previous week, while the subscription rate for the 182-day paper decreased to 38.6% from the 52.5% recorded the previous week.

The government accepted a total of Kshs 43.6 bn worth of bids out of Kshs 44.7 bn of bids received, translating to an acceptance rate of 97.5%.

The yields on the government papers recorded a mixed performance, with the yields on the 364-day and 91-day papers increasing by 40.6 bps and 36.5 bps to 13.7% and 13.5% respectively while the yields on the 182-day paper decreased by 16.2 bps to 13.3%.

In the just released H1’2023 financial results, Equity Group recorded a 7.8% increase in Profit After Tax (PAT) to Kshs ...
17/08/2023

In the just released H1’2023 financial results, Equity Group recorded a 7.8% increase in Profit After Tax (PAT) to Kshs 26.3 bn, from Kshs 24.4 bn recorded in H1’2022. The performance was mainly driven by a 41.2% increase in Non-Interest Income to Kshs 36.5 bn in H1’2023, from Kshs 25.8 bn recorded in H1’2022, coupled with a 16.5% increase in Net Interest Income to Kshs 46.4 bn from Kshs 39.8 bn recorded in H1’2022.

The performance was, however, weighed down by a 37.4% increase in operating expenses to Kshs 47.7 bn in H1’2023 from Kshs 34.7 bn in H1’2022. The increase in operating expenses was mainly driven by a significant 73.6% increase in loan loss provisions to Kshs 7.1bn, from Kshs 4.1 bn in H1’2022, an indication of increased provisioning.

On our Focus this week, we analyzed Restructuring and Insolvency in Kenya by exploring The Insolvency Act of 2015, Chall...
14/08/2023

On our Focus this week, we analyzed Restructuring and Insolvency in Kenya by exploring The Insolvency Act of 2015, Challenges affecting insolvency practice, and offering in-house Recommendations.

According to the latest statistics by Kenya’s State Receiver’s office, the total number of petitions for liquidation of companies by courts has been increasing on average by 33 every year. The success of a restructuring process depends on the company's ability to adhere to the repayment plan, gain creditor support, and effectively implement its restructuring efforts.

Click the link below to read our full Topical: https://t.ly/0aL7o

In the just released H1’2023 financial results, Stanbic Holdings recorded a 47.0% increase in Profit After Tax (PAT) to ...
11/08/2023

In the just released H1’2023 financial results, Stanbic Holdings recorded a 47.0% increase in Profit After Tax (PAT) to Kshs 7.1 bn, from Kshs 4.8 bn recorded in H1’2022.

The performance was mainly driven by a 44.4% increase in Net-Interest Income to Kshs 12.1 bn in H1’2023, from Kshs 8.3 bn recorded in H1’2022, coupled with a 29.7% increase in Non-Interest Income to Kshs 8.9 bn from Kshs 6.9 bn recorded in H1’2023.

The performance was however weighed down by a 18.9% increase in operating expenses to Kshs 8.7 bn in H1’2023 from Kshs 7.3 bn in H1’2022.

The increase in operating expenses was mainly driven by a 98.0% increase in loan loss provisions to Kshs 2.5 bn, from Kshs 1.3 bn in H1’2022, an indication of increased provisioning.

This week, T-bills were oversubscribed for the first time in three weeks, with the overall subscription rate coming in a...
10/08/2023

This week, T-bills were oversubscribed for the first time in three weeks, with the overall subscription rate coming in at 199.7%, up from an undersubscription rate of 47.1% recorded the previous week.

Investors’ preference for the shorter 91-day paper persisted, with the paper receiving bids worth Kshs 41.8 bn against the offered Kshs 4.0 bn, translating to an oversubscription rate of 1,044.6%, albeit lower than the 167.4% recorded the previous week.

The subscription rate for the 364-day paper increased to 9.0% from 2.6% recorded the previous week, while the subscription rate for the 182-day paper increased to 52.5% from the 43.5% recorded the previous week.

The government accepted a total of Kshs 47.8 bn worth of bids out of Kshs 47.9 bn of bids received, translating to an acceptance rate of 99.7%.

The yields on the government papers continued to rise, with the yields on the 364-day, 182-day, and 91-day papers increasing by 23.3 bps, 88.0 bps, and 42.5 bps to 13.3%, 13.4%, and 13.1%, respectively.

The Central Bank of Kenya (CBK) Monetary Policy Committee (MPC) is set to meet on Wednesday, 9th August 2023. We antici...
04/08/2023

The Central Bank of Kenya (CBK) Monetary Policy Committee (MPC) is set to meet on Wednesday, 9th August 2023. We anticipate the MPC maintaining the Central Bank Rate (CBR) at the current 10.50%, with a focus on the need to continue cooling down inflation. Key to note, the y/y inflation rate in July 2023 eased to 7.3% from 7.9% recorded in June 2023, marking the first time in 14 months that inflation has fallen within the CBK target range of 2.5%-7.5%. However, the risk lies on the back of elevated fuel prices following the increase in VAT on petroleum products to 16.0% from 8.0%.

Notably, given the greater deterioration in the business environment evidenced by the Purchasing Managers Index (PMI) dropping to 45.5 in July from 47.8 in June 2023, we expect the MPC to adopt an accommodative policy that will support the private sector given that an additional hike in the CBR rate might curtail economic growth. As such, we expect the MPC to maintain the CBR, as the current monetary stance still transmits in the economy, and react accordingly, given that its main role is maintaining price stability.

For a comprehensive analysis, see our August 2023 MPC Note here: https://t.ly/a2RfH

This week, T-bills were undersubscribed for the second consecutive week, with the overall subscription rate coming in at...
03/08/2023

This week, T-bills were undersubscribed for the second consecutive week, with the overall subscription rate coming in at 47.1%, up from an undersubscription rate of 38.1% recorded the previous week.

Investors’ preference for the shorter 91-day paper persisted, with the paper receiving bids worth Kshs 6.7 bn against the offered Kshs 4.0 bn, translating to an oversubscription rate of 167.4%, albeit lower than the 176.8% recorded the previous week.

The subscription rate for the 364-day paper decreased to 2.6% from 7.1% recorded the previous week, while the subscription rate for the 182-day paper increased to 43.5% from the 13.6% recorded the previous week.

The government accepted a total of Kshs 10.3 bn worth of bids out of Kshs 11.3 bn of bids received, translating to an acceptance rate of 91.4%.

The yields on the government papers continued to rise, with the yields on the 364-day, 182-day, and 91-day papers increasing by 37.9 bps, 16.6 bps, and 33.3 bps to 13.1%, 12.6%, and 12.7%, respectively.

31/07/2023

For this week’s topical, we covered the Kenya Retail Sector Report 2023, based on research that was conducted on nine nodes within the Nairobi Metropolitan Area (NMA), in addition to other key urban cities in Kenya, including Kisumu, Nakuru, Mombasa, Eldoret, and the Mount Kenya Region.

The Kenya Retail Sector displayed a stable overall performance, with the average rental yield coming in at 7.5% in 2023, which was 0.7% points increase from 6.8% recorded in 2022.

For more information, please click the link below to read our Focus: https://t.ly/9zzym

On our Focus this week, we analyzed the various Education Investment Plans in the market and the factors to be considere...
24/07/2023

On our Focus this week, we analyzed the various Education Investment Plans in the market and the factors to be considered when selecting a suitable investment plan.

According to the Kenya National Bureau of Statistics Finaccess Household Survey report, education took the second priority after food in households' consumption budget, at 30.2%, compared to food which had a priority of 31.8%. This highlights the importance of guardians looking for alternative ways to support education expenses.

Click the link below to read our full report: https://t.ly/BjE0D

The Central Bank of Kenya has released the auction results for the tap sale of the re-opened bond FXD1/2016/10 with a 3....
21/07/2023

The Central Bank of Kenya has released the auction results for the tap sale of the re-opened bond FXD1/2016/10 with a 3.2-year tenor to maturity and the newly issued bond FXD1/2023/05 with a tenor to maturity of 5 years.

The tap sale was oversubscribed, receiving bids worth Kshs 44.4 bn against the offered Kshs 20.0 bn, translating to a 222.1% oversubscription rate. The government accepted bids worth Kshs 43.4 bn, translating to an acceptance rate of 97.8%.

The coupon rates for the FXD1/2016/10 and FXD1/2023/05 are 15.0% and 16.8%, respectively and allocated average rates for accepted bids are 16.3% and 16.8% for FXD1/2016/10 and FXD1/2023/05, respectively

17/07/2023

On our Focus this week, we discussed the overall performance of the Nairobi Metropolitan Area land sector over time and examined various factors that influence its performance based on selling prices and annual capital appreciation. Additionally, we identified investment opportunities for the sector using the 2023 market research data.

To read the full report, please click here: https://t.ly/hQsry

10/07/2023

This week we covered a topic on National Health Insurance Fund to shed light on the current state of the fund. We noted that NHIF has undergone a number of notable changes, such as the Amendment of The NHIF act, upward revision of workers’ monthly contributions, expansion of NHIF Benefits and implementation of biometric registration.

However, despite the progress made by NHIF over the 57 years, it has been in operation, the fund has encountered a number of challenges which continue to affect the operation.

For more information, please click the link below to read our focus: https://t.ly/_WMWG

26/06/2023

This week, we analysed Kenya’s FY’2023/2024 National Budget presented to the National Assembly. The total budget estimates for FY’2023/24 will increase by 8.7% to Kshs 3.7 tn from the Kshs 3.4 tn in FY’2022/2023 while the total revenue inclusive of grants will increase by 15.7% to Kshs 3.0 tn from the Kshs 2.6 tn in FY’2022/2023.

The increase is mainly due to a 17.3% increase in ordinary revenue to Kshs 2.6 tn for FY’2023/2024 from the Kshs 2.2 tn in FY’2022/23. Over the years, the Kenyan Government budget has been on the rise on the back of ever-increasing recurrent expenditure.

For more information, please see our report here: https://t.ly/D-yD

19/06/2023

This week, we analysed the financial performance of the listed banks and identified the key factors that shaped the performance of the sector following the release of the Q1’2023 results by Kenyan banks. The banking sector remained resilient despite the tough operating environment occasioned by elevated inflationary pressures experienced during the period, with the listed banks recording a 25.0% weighted growth in core earnings per share (EPS) in Q1’2023, compared to a weighted growth of 37.9% recorded in Q1’2022.

Read more in our report here: https://t.ly/y69O

12/06/2023

This week, we analyzed the financial performance of the listed insurance companies and the key factors that drove the insurance sector's performance in FY’2022.

The insurance uptake in the country remains low, with the insurance pe*******on coming in at 2.3% in 2022. Additionally, the listed insurance sector recorded an increase in Core EPS, despite the constrained business environment as a result of elevated inflationary pressures and sustained currency depreciation.

Read more in our report here: https://t.ly/xH271

During the week, T-bills were oversubscribed for the first time in three weeks, with the overall subscription rate comin...
09/06/2023

During the week, T-bills were oversubscribed for the first time in three weeks, with the overall subscription rate coming in at 138.0%, from an undersubscription rate of 98.2% recorded the previous week

Investor’s preference for the shorter 91-day paper persisted as they sought to avoid duration risk, with the paper receiving bids worth Kshs 29.0 bn against the offered Kshs 4.0 bn, translating to an oversubscription rate of 725.5%, up from 511.3% recorded the previous week

The subscription rates for the 182-day papers increased to 18.9% from 5.5% recorded the previous week. However, the subscription rate for the 364-day paper decreased to 22.0% from 25.6% recorded the previous week

The government accepted bids worth Kshs 32.1 bn out of the Kshs 33.1 bn total bids received, translating to an acceptance rate of 97.1%

The yields on the government papers were on an upward trajectory, with the yields on the 364-day, 182-day and 91-day papers increasing by 11.1 bps, 43.6 bps and 31.1 bps to 11.6%, 11.5% and 11.4%, respectively

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