Equity turnover at the bourse lifts stockbrokers’ earnings

What you need to know:

The NSE’s total market turnover for 2014 stood at Sh215.7 billion, up from Sh155.7 billion recorded in 2013.
Stockbrokers, who earn commissions from both sells and buys, have been reporting much improved income although rising expenses are also biting into the gains.

Stockbrokers are reporting higher net earnings for the 2014 financial year after a record year of equity turnover on the Nairobi Securities Exchange (NSE).

Kestrel Capital on Wednesday published financial results showing a 42 per cent increase in net profit for the year to Sh82.5 million. The company’s total income was up 24 per cent to Sh59 million.

The NSE’s total market turnover for 2014 stood at Sh215.7 billion, up from Sh155.7 billion recorded in 2013.

Stockbrokers, who earn commissions from both sells and buys, have been reporting much improved income although rising expenses are also biting into the gains.

Kestrel’s brokerage commissions rose by 22 per cent to Sh529.4 million, with the firm having enjoyed the largest slice of the turnover at the market at Sh76.8 billion.

Renaissance Capital (Rencap) followed with trades worth Sh59.5 billion and SBG Securities with trades worth Sh57.1 billion.

READ: Stockbrokers make a killing as NSE turnover skyrockets

But Kestrel’s expenses rose by 20 per cent to Sh475.9 million to eat into the revenue, which meant that the company was outpaced by SBG Securities (formerly CfC Financial Services) in profit.

“Cost of operations and compliance continues to grow, putting more pressure to increase trading volumes and public listings,” said Kestrel Capital chief executive officer Andre DeSimone in an earlier interview.

Genghis Capital has also in the past week announced its results, seeing its profit grow more than five-fold to Sh72.3 million from Sh13.9 million in 2013.

Genghis’ brokerage commissions rose by 65 per cent to Sh165 million— and nearly doubling income from Sh134.2 million to Sh261.5 million.

NIC Securities earlier this month reported a net profit of Sh55.4 million, up by 57 per cent compared to 2013. The firm had brokerage commissions of Sh137 million up from Sh84.7 million in 2013.

SBG in February reported a net profit increase of 26 per cent for the last financial year to Sh237.8 million, following a 30 per cent rise in brokerage commissions to Sh454.53 million.

SBG’s total income grew by 17.7 per cent to Sh604.3 million, and expenses up by 2.8 per cent to Sh251.8 million.

AIB Capital has recorded the biggest profit growth rate so far among the intermediaries that have reported earnings, with net profit up tenfold to Sh56.44 million buoyed by realised gains on investments.