Capital Markets

Equity leads bank stocks in dominating trade at NSE

eqty

An Equity branch in Nairobi. The bank’s stock gained a further five per cent on Wednesday. Photo/FILE

Bank stocks dominated trading at the Nairobi Securities Exchange on Wednesday, backed by a second straight day of significant price gain and high volumes on the Equity Bank counter.

Equity gained a further five per cent in price on Wednesday, bringing its gain this week to 9.2 per cent, with 10 million shares traded.

The banking sector had 15.6 million shares traded representing 35.7 per cent of the day’s traded volume.

Other gaining lenders included Diamond Trust Bank which was up 3.2 per cent to close at Sh227, while KCB was up 1.6 per cent to close at Sh48.50 having moved 2.4 million shares. Co-operative Bank moved 1.1 million shares and closed 1.2 per cent up at Sh21.50.

The performance of the big banks helped stabilise the market on a day when other big counters either ceded ground or remained flat, with the NSE 20-Share and NSE All Share indices unchanged at 4904 and 148 points respectively.

Mortgage lender Housing Finance shed four per cent despite its announcement of first quarter results that showed profit after tax rising by 13 per cent to Sh221 million.

The lender’s core lending business showed uptake in loans and advances had slowed down, with net interest income lower by 2.14 per cent at Sh652.05 million.

“Though HF still commands strong brand loyalty as the only stand alone mortgage financier, given increased competition from commercial banks, we remain wary of its low capital adequacy ratio, thin margins and high gearing,” said Standard Investment Bank in a market note.

Housing Finance has however plans to expand its capital base by creating new shares, pointing to a probable rights issue.

It is expected to seek shareholder approval to increase its authorised shares from 236 million shares to 500 million when it holds its AGM this week.