Banks lift NSE to a two-month high

Bank stocks have picked up value in the past week as they continue to release full-year financial results, helping the NSE 20 share index record a 4.1 per cent gain. The NSE main index has as a result risen to a two-month high of 3980 points.

Ten of the 11 listed banks have gained in share prices since last Monday in spite of mixed financial results from the five that have so far announced results. The spike in share prices has also pushed the sectors market capitalisation into the black for the year-to-date, with a gain of 1.1 per cent or Sh7 billion to Sh667 billion. “Banks should stimulate the market as they continue to announce improved results this week,” said Sterling Capital analyst Eric Munywoki.

The biggest gain in the past week has been recorded on the CfC Stanbic stock in spite of the lender’s drop in net earnings, with the stock 15 per cent up in a week to Sh88 per share. CfC Stanbic Bank last week announced a 13.71 per cent drop in full-year 2015 net profit to Sh4.91 billion from Sh5.69 billion in 2014. Barclays on its part announced that net profit remained flat at Sh8.4 billion in 2015.

On the other hand, both KCB and NIC Bank announced higher profits for the year. KCB’s net earnings grew by 16.5 per cent to Sh19.6 billion, the highest ever recorded by a bank in Kenya. NIC posted a net profit of Sh4.48 billion, an 8.95 per cent increase from the previous year.

KCB has gained 3.1 per cent to Sh41.25, and NIC also up 3.1 per cent to Sh41.25 since the beginning of last week.
Equity Bank, which is expected to announce its financial results today, is up nine per cent over the same period, with the lender among those expected to reveal higher earnings for the past year.

The only share price decline among the banks in the past one week has been on the Barclays Bank stock, which has shed 4.2 per cent on the back of corporate announcements. “Barclays was among the leading losers as local investors reacted to news of Barclays Plc selling down its stake in its Africa unit,” said Standard Investment Bank in a note to clients.

Analysts expect the market to continue making gains — even if modestly — due to favourable valuation that saw foreign investors turn from net sellers in the last three weeks of February to net buyers last week.

“The sustained foreign investor inflows can be attributed to improved investor sentiments, which has seen stock market (All Share Index) recover from negative six per cent in January to 0.9 per cent year to date. We expect earnings to improve during the year by about 10 per cent due to a favourable macroeconomic environment of low interest rates and a stable shilling,” said Cytonn Investments in a weekly market analysis. (BUSINESS DAILY)