Capital Markets

Banks top in valuation on NSE stock price rally


Stockbrokers at the Nairobi Securities Exchange. FILE PHOTO | NMG



  • The rise in bank share prices came in the last quarter of last year after the repeal of the rate cap law.

The banking stocks’ rally and issuance of additional shares have seen the segment edge out industrial, construction and services stocks in the ranking of the top 10 companies by market capitalisation at the Nairobi Securities Exchange (NSE).

EABL #ticker:EABL, which was ranked the second-largest firm at the NSE at the beginning of 2019, has now been pushed down to fourth by Equity Holdings #ticker:EQTY and KCB #ticker:KCB, which have outpaced the brewer in price appreciation in the past 12 months.

BAT Kenya #ticker:BAT has also fallen down the ranking, going from sixth last year to ninth, while NCBA #ticker:NIC and I & M Holdings #ticker:I&M have joined the top 10 list on the back of price appreciation and issuance of new shares.

Kenya Airways #ticker:KQ and Bamburi Cement #ticker:BAMB have dropped out of the list of top 10 largest firms by market cap, which is still led by Safaricom #ticker:SCOM at Sh1.26 trillion.

The rise in bank share prices came in the last quarter of last year after the repeal of the rate cap law.

“The rise in the index that began in the second half of October 2019 was driven by appreciating banking stocks, with the removal of the rate cap signalling investors that commercial banks will be able to return to past lending practices and lead to stronger profits for the industry as a whole,” said risk and research firm Stratlink Africa in its January 2020 Africa markets update note.

Equity and KCB’s share prices have since the beginning of 2019 gained 46 and 38 percent respectively, giving them market valuations of Sh192.5 billion and Sh166.2 billion respectively.

EABL has also seen an increase over the period — 20 percent — pushing its valuation from Sh138.2 billion to Sh166.06 billion, which has not been enough to prevent the two lenders from overhauling it on the list.

Kenya Airways and Bamburi, which were valued at Sh50.6 billion and Sh48.1 billion at the beginning of 2019, have dropped off the list with valuations now at Sh13.4 billion and Sh26.2 billion respectively.

NCBA (formerly listed as NIC Bank) issued an additional 793.8 million shares during the merger of NIC with Commercial Bank of Africa, which coupled with a share price increase of 31 percent has seen it jump up to become the eighth largest firm at the NSE.