StanChart slides on NSE big stock list as price slumps 40pc
Standard Chartered's 40 per cent slump in share price over the past year has pushed the lender down three places among the Nairobi Securities Exchange (NSE’s) 10 largest stocks. PHOTO | FILE
What you need to know:
Investor sentiments on the stock in the fourth quarter of 2015 were clouded by a disappointing performance over the preceding nine months ended September, which saw its net profit drop 24.3 per cent to Sh6.2 billion.
StanChart’s market capitalisation now stands at Sh62.7 billion, having declined by Sh40.8 billion since the beginning of 2015. The bank’s share price has tumbled from Sh335 in January 2015 to the current Sh202.
The downturn in prices have however opened a window for buyers into stocks such as StanChart, whose high nominal price has in the past locked out retail investors from taking up a stake in the subsidiary of the UK multinational.
Standard Chartered Bank’s 40 per cent slump in share price over the past year has pushed the lender down three places among the Nairobi Securities Exchange (NSE’s) 10 largest stocks.
Market data compiled by Standard Investment Bank (SIB) shows that Co-operative Bank, BAT Kenya and Barclays have all overhauled StanChart in the top list, to number 8 from 5.
Investor sentiments on the stock in the fourth quarter of 2015 were clouded by a disappointing performance over the preceding nine months ended September, which saw its net profit drop 24.3 per cent to Sh6.2 billion.
Consequently, StanChart issued rare a profit warning for the full year ending December 31, the only banking counter among the 15 listed firms that issued such alert in the whole of 2015.
StanChart was also the only one among the listed tier-one banks to report a profit decline, leading some analysts to question the lenders strategy in an increasingly competitive market.
“In our view, Standard Chartered is best at being a banker for corporate clients and should stick to their niche and improve on their strengths; they should leave SME and mass banking to KCB, Equity and Co-operative, who are good in that space,” said Cytonn Investments in a review of the lender’s performance.
StanChart’s market capitalisation now stands at Sh62.7 billion, having declined by Sh40.8 billion since the beginning of 2015. The bank’s share price has tumbled from Sh335 in January 2015 to the current Sh202.
Gainers
Bamburi was the largest gainer on the list climbing up from 11th to ninth as its capitalisation grew from Sh50.5 billion to Sh61.7 billion on a share price rise of Sh31 to Sh170 during the period. Safaricom is the only other firm among the top 10 with a share price appreciation over the past one year.
On the other hand, Britam has dropped from ninth largest company to 19th due to the firm’s share depreciating by 53.6 per cent to Sh13.80, slashing the firm’s capitalisation by Sh30.9 billion to Sh26.75 billion.
The downturn in prices have however opened a window for buyers into stocks such as StanChart, whose high nominal price has in the past locked out retail investors from taking up a stake in the subsidiary of the UK multinational.
Analysts see potential capital gains in the stock of StanChart, especially if the impending cost-cutting measures bear fruit and the lender manages to bring down bad loans on its books, thus improving financial numbers.
“Against quarter three 2015 numbers, StanChart is currently trading at 1.66 times price to book (lowest multiple in more than a decade). The current price to book multiple offers attractive re-rating upside, in our view,” said SIB in an analysis note on the bank.
StanChart was Kenya’s third largest bank by profit in 2014—after KCB, and Equity, followed by Barclays and Co-operative—a situation that could change for 2015.
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