Rising Cost of Loans, the Shinning Equity & Markets.
CBK MPC and other emerging markets banks on rates, Equity stellar performance and markets.
Hey Hisa fan,
Major Central banks within the Sub-Saharan African region and across other emerging markets rushed last week to close the quarter with new policy regulatory guidelines setting pace for trends across the financial sectors of these countries.
Notably, majority of these policies came in barely a week after global central banks such as the Bank of England, Bank of Japan, People’s bank of China and the Federal Reserve Bank of the United States issued various policy guidance on the monetary status of their regions. This begs a challenging task on the autonomy of central banks in emerging markets.
The Central Bank of Kenya last week announced that the Monetary Policy Committee; the regulator’s committee tasked with fixing the benchmark interest rate for the market in line with other growing economic concerns; had settled on raising the interest rates by a whooping 75 basis points (0.75%). The declaration by CBK is the fourth rate rise in the last six monetary policy meetings, totalling 250bp of increases since May 2022.
Other banks which had their monetary policy meetings last week included:
South Africa - The South African Reserve Bank last Thursday, raised it’s benchmark lending rates by a whooping 50 basis points to 7.75%. This was the ninth consecutive time, adding a total of 425 bps to the repo rate since November 2021.
Thailand - The Bank of Thailand raised its policy rate for a fifth straight time by 25 basis points to 1.75%, on March 29 and signalled further tightening to come.
Ghana - The Bank of Ghana's last Monday raised its benchmark interest rate to 29.5% despite two consecutive months of slowing inflation.
Mexico - Bank of Mexico (Banxico) raised its benchmark lending rate to 11.25%. Banxico’s benchmark rate has now risen 725 basis points since June 2021.
Hisa team will continue to monitor the monetary policy minutes from global and regional central banks and keeping you up to date.
Earnings Close (1Q23 Deadline).
Equity Group Holdings Plc [NSE: EQTY]Equity Group released their Financial Results for the full year ended 31st December 2022. The Company posted a record Profit Before Tax of KES 59.8 Billion and a net Profit After Tax of KES 46.1B – a 15% Year-on-Year growth.
Net interest income grew by 25.0% y-o-y to KES 86.0 billion driven by a 26.8% y-o-y growth in total interest income to KES 119.6 Billion.
Non-funded income (NFI) rose by 34.5% y-o-y to KES 59.9 Billion
Operating expenses similarly posted a 27.0% y-o-y growth to KES 70.7 Billion
The group’s cost-to-income ratio (excluding provisions) eased by 66 bps y-o-y to 48.4% (FY21: 49.1%).
Loan loss provisions skyrocketed by 163.7% y-o-y to KES 15.4 Billion. However, the NPL ratio eased by 0.6% y-o-y to 7.7%.
Net loans and advances rose by 20.2% y-o-y to KES 706.6 Billion, while government and investment securities remained relatively flat at KES 394.0 Billion
Customer deposits was up by 9.7% y-o-y to KES 1.1 Trillion while borrowed funds decreased by 8.2% y-o-y to KES 113.7 Billion.
Equity Group declared a 33.3% growth in dividends to shareholders of KES 4.00 per share (FY2021:KES 3.00) with books closure date set for 19th May, 2023 with Dividend payment date on or before the 30th of June, 2023.
Diamond Trust Bank Group Plc [NSE: DTK]Diamond Trust Bank posted a 44% growth in pre- tax profits of KES 9.5 billion for the year ended 31 December 2022.
Total assets by the group rose 15% in 2022 to KES 527 Billion (FY2021: 456.8 Billion)
Profit after tax for the group rose 54% during the FY2022 to KES 6.8 Billion.
DTB posted a 66.7% growth in dividends to shareholders, with the company declaring a dividend of KES 5.00 per share. (FY2021:KES 3.00).
Non-Funded Income (NFI) grew by 43.5% to KES 9.1 Billion in FY’2022, from (FY2021:KES 6.3 Billion).
Total operating expenses was up 11.1% to KES 22.1 Billion in FY2022, from (FY2021: KES19.9 Billion).
DTB remains sufficiently capitalised with a core capital to risk-weighted assets ratio of 19.8%, 9.3% points above the statutory requirement of 10.5%.
DTB will this financial year focus on growing its regional footprint by opening new branches across the country as part of its customer acquisition sales strategy, the bank is expected to improve its network by opening 35-40 new branches within Kenya by end of 2023.
Other Key Banks that released their earnings:
HF Group Plc [NSE: HFCK] - Profit after tax of KES 0.3 Billion, a 138.9% increase from a loss after tax of KES 0.7 Billion posted in FY2021.
I&M Group Plc [NSE: IMH] - I&M Group declared a first and final dividend for the year of KES 2.25 per share, a 28.8% growth from the 2021 dividend of 2.00 per share.
Bank of Kigali Group Plc [NSE:BKG] - Bank of Kigali (BK) posted a 15.1% growth in profit after tax for the FY2022 to Rwf59.7 billion (KES7.1 billion). The board declared a dividend of Rwf32.5 (KES 3.87 per share).
Coffee Break.
Every week, we take a look into which companies are making headlines on Hisa. Ever wondered about meeting the team behind Hisa? This coming Saturday, we will be holding our monthly investor community Focus. Let us see you then.
Markets.
On global markets, bank stocks, which for the past few weeks have declined sharply since Silicon Valley Bank (SVB) and Signature Bank collapsed earlier in March, advanced, with the widely followed KBW Bank Index easily outpacing the broad market’s gains.
The S&P 500 was up 3.5% during the week to close at 4,109.31, while the Nasdaq Composite advanced 3.4% to end the week at 12,221.91. The Dow Jones Industrial Average similarly gained 3.2% to close Friday at 33,274.15.
For the first quarter of 2023, the S&P 500 and Nasdaq were up 7.03% and 16.77%, respectively while the Dow ended the quarter with a 0.38% increase.
Local Markets.
The equities market at the local bourse maintained an upward trend indicating recovery. The benchmark NASI, NSE 20, and NSE 25 all posted gains of 1.2%, 3.7%, and 4.8%, respectively.
the year-to-date performance for NASI, NSE 20, and NSE 25 still remains in the red with benchmark All share index (NASI) leading the drop of 11.4% and the NSE 20 and the NSE 25 posting Y-T-D losses of 3.2%, and 5.5%, respectively.
What Cowries are we collecting this week?
Market Dynamics Kenya - The recent protests made an investor scare on the market. Kenya’s President Dr. William Ruto, called on the opposition to call off protests, which they did! How will the market and the economy react to this?
Kenya Power & Lighting Company Plc [NSE:KPLC] - The search for the next Managing Director at KPLC continues, last week, they narrowed to three, we watch on overall progress this week.
U.S Banking Sector - With the recent proposals by the Biden Administration and the various changes on the commodities sector, will the banking sector turmoil stabilise, or will it worsen?
How about you, what stocks are you watching for the week? Let us know on Hisa App.
Disclaimer: The writer of this article owns SCOM 0.00 , HAFR , EQTY 0.72%↑ , NVDA -0.72%↓ & AAPL 2.08%↑ shares. This article does not constitute any investment recommendations. Investors and the general public are advised to do their own research before making any investment decision.