NSE profit soars 210pc ahead of planned listing in June

The Nairobi Securities Exchange (NSE) recorded a 210 per cent growth in net profit for the year ending December 2013 ahead of its listing planned for June this year.

Net profit stood at Sh262.7 million, up from Sh84.8 million in 2012 with revenue up by 62 per cent to Sh622 million.

NSE chief executive officer Peter Mwangi said that increased activity which saw total equity turnover for 2013 rise to Sh155 billion compared to Sh84 billion in 2012 was the main profit driver.

“Our main source of income is the trading commissions, and as long as there is more trading activity like we saw last year, our top line revenues increase as well,” said Mr Mwangi.

Bonds turnover stood at Sh452.46 billion in 2013, compared to the 2012 turnover of Sh565.7 billion.

From its 22.5 per cent shareholding in Central Depository and Settlement Corporation where the NSE holds 225,000 shares, it got a share of profits of Sh14.25 million, up from Sh3.5 million in 2012.

In 2013, the equities market activity grew on increased participation from both local and foreign investors. Foreign investor participation at the bourse stood at 51.38 per cent in 2013.

Operating income which includes transaction levies annual listing fees and flotation fees rose to Sh488.8 million up from Sh329.9 million in 2012.

The exchange earns a transaction levy of 0.12 per cent of the value of shares traded and 0.0035 per cent for the value of fixed income securities traded—for both sell and buy-on its platform.

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The transaction levy earnings from equities stood at Sh374 million in 2013, while those from bonds trading were Sh31.7 million. Administrative expenses rose by 29 per cent to Sh333.8 million, with finance costs up to Sh39.4 million from Sh1.5 million in 2012.

The bourse is set to pay a final dividend of Sh2 per share, up from Sh1 a share in 2011 with the total payout amounting to Sh49 million, for the 24.5 million issued shares.

This means that stockbrokers and investment banks by virtue of their holding of 88 per cent of the bourse, will earn Sh43.1 million in dividends.

Mr Mwangi said that the bourse expects to sustain the revenue levels in 2014 through the introduction of other products including REITs and derivatives.

The market in the first quarter of 2014 has recorded equity turnover of Sh44.1 billion, which is 28 per cent higher than the turnover in the first quarter of 2013.

“We expect the sovereign bond to be issued this year to trigger a rally in the local secondary bond market as issuance of new local currency bonds diminishes.

As interest rates in local market moderate the bonds prices should rise which should be interesting for investors in the local market,” said Mr Mwangi.

Mr Mwangi also downplayed the impact of the US Federal reserve stimulus programme tapering, saying local investor participation was at nearly 50 per cent.