NSSF raises stake in KCB with Sh224m shares buyout

NSSF, the statutory workers’ retirement fund, has bought additional shares worth Sh223.6 million in KCB, cementing its position as the second-largest shareholder in the bank after the Treasury.

Regulatory filings show that the National Social Security Fund (NSSF) bought 3.8 million KCB shares in the five months to October, raising its stake to 7.51 per cent from 7.48 per cent in May.

The Treasury is the top shareholder of KCB with a 17.31 per cent stake despite undergoing dilution in recent rights issues in which it did not participate.

The move by NSSF to boost its ownership of KCB is seen as a signal of its confidence in the country’s largest lender by assets. The retirement fund is a major investor in the equities market where it has a portfolio running into billions of shillings spread across several listed firms.

NSSF’s investable funds are expected to grow significantly on the implementation of higher workers’ contribution rates.

The new NSSF Act proposes to more than double contributions by employers and workers to NSSF from the current flat rate of Sh200 each.

The new rates have however been suspended following litigation by labour unions. If implemented, the higher rates will add billions of shillings to NSSF’s regular collections, setting the stage for more investments in property, fixed income and equities among other asset classes.

While the NSSF boosted its equity position in KCB, other large Kenyan institutional investors sold off or reduced their stake in the lender.

Old Mutual Life Assurance Company, for instance, sold 1.8 million shares worth Sh103.6 million in the same period.

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This reduced its ownership of the bank to 0.4 per cent from 0.46 per cent. ICEA Lion Life Assurance Company, which held 10.7 million shares worth Sh619.6 million in May, had disappeared from the bank’s list of top owners in October.

It was not immediately clear whether ICEA had sold all or part of its holding in the trade.

KCB’s increased profitability has made it a favourite of local institutional investors who own the single largest combined bloc of shares at 43.5 per cent.

They are followed by foreign investors whose ownership stands at 29.7 per cent. Over 140,000 local individual investors, control 26.6 per cent of the bank’s stock.

KCB has leveraged its large asset base and regional expansion to remain at the top of Kenya’s bank earnings charts since overtaking Barclays as the most profitable lender in 2011.

Its net profit in the nine months ended September rose 15.4 per cent to Sh12.4 billion, helped by growth in non-interest income. The bank’s share price has gained 24 per cent in the past one year to trade at Sh57.5.