Capital Markets

Five more market intermediaries report losses amid market slump

Investment brokers on the trading floor of the Nairobi Securities Exchange. PHOTO | FILE
Investment brokers on the trading floor of the Nairobi Securities Exchange. PHOTO | FILE 

Four more brokerages and investment banks on Monday reported losses in the first six months as revenue from stock sales at the Nairobi Securities Exchange (NSE) contracted amid a lengthy market slump.

NSE 20 share index is down nearly 15 per cent in the year to date. Brokers are paid commissions as a percentage of the traded price such that higher stock prices and turnover increase their income.

Dyer & Blair, Old Mutual Securities and ABC Capital reported after tax losses of Sh59.3 million, Sh14.3 million and Sh5.9 million respectively while Faida Investment Bank reported a 58.8 per cent slump in profit to Sh6.9 million.

Dyer and Blair said its brokerage commissions dropped by 74.2 per cent to Sh46.1 million in the period while its advisory earnings fell 87 per cent. Its total income meanwhile slumped 63.9 per cent to Sh93.9 million.

Old Mutual Securities reported nearly flat earnings in brokerage and commissions 0.9 per cent to Sh14.7 million.

ABC Capital on the other hand posted a 193 per cent drop in brokerage commissions to Sh2.1 million for the period with its total income for the period declining 16.6 per cent to Sh6.8 million.

Faida Investment Bank on the other hand posted increased earnings in brokerage commissions by 4.9 per cent to Sh141 million in the six months.
Despite this, it reported a 58.8 per cent slump in net profit to Sh6.9 million in the six months.

Investment bank Dry Associates however bucked this trend reporting a 12.8 per cent jump in profit to Sh150 million for the period.

Dry Associates said its brokerage commissions rose 7.9 per cent to Sh133 million while its advisory and consultancy fees shot up 116 per cent to Sh4.3 million.

In January this year, Dry Associates Ltd opened a unit trust scheme targeting the deep-pocketed with a minimum investment of Sh1 million.

At the time it went against the grain, with other fund managers striving to attract small investors to unit trust schemes by lowering the minimum investment amount from upwards of Sh100,000.

The NSE has generally been on the decline this year with bourse data showing that the number of trades fell by 31 per cent to 158,790 in the six months to June 2015, from 232,212 the same period last year.

Other market intermediaries which have been affected by the slump include Kestrel Capital, Renaissance Capital (Rencap), AIB Capital, Kingdom Securities Ltd, all of which have recently disclosed that their half-year profits took hits following reduced brokerage commissions and related income arising out of the long bear run on the NSE.