SBG Securities profit falls 71pc on lower income

Stanbic owned investment bank SBG Securities posted a 71.3 per cent drop in net profit in the year ended December 2020, due to lower advisory fees and brokerage commissions.

The market intermediary reported a net profit of Sh34.98 million in the period, down from Sh121.85 million in 2019.

Advisory and consultancy fees, which are earned when the firm handles corporate deals, fell by Sh83.1 million to Sh11.2 million in the period, while brokerage commissions were down by Sh63.7 million to Sh189 million.

This saw total income shrink by Sh155.5 million to Sh259.6 million during the year.

The fall in advisory fees was attributed to the fact that 2019’s income had been boosted by one-off advisory deals, including the takeover of oil marketer KenolKobil by French energy firm Rubis Energie in which SBG was the lead broker and Stanbic the lead transaction advisor.

Rubis closed the acquisition in March 2019.

“There were two non-recurring significant investment banking deals in the first quarter of 2019,” said the firm in its investor presentation last Friday.

Brokerage commission fell at a time when the equities and bonds markets at the NSE returned mixed performances in 2020, in terms of traded turnover.

Equity turnover at the bourse fell by 3.34 per cent to Sh148 billion last year from Sh153 billion in 2019, while bonds turnover rose by 6.08 per cent from Sh651 billion to Sh691 billion.

Equities trades attract a commission of up to 1.8 per cent per trade at the market, while the fee for bonds is pegged at 0.03 per cent per trade.

SBG is the first investment bank or stockbroker to release its full year results.

The firm responded to the falling income last year by cutting costs, which came down by Sh26.3 million to Sh210.8 million.

The biggest fall was in employee expenses, which fell by Sh23.7 million to Sh70 million.