Bank stocks depressed after rate cap failure

Prices of nearly all listed banks fell in the five days to last Friday on Parliament’s failure to review the rate cap, with three extending the losses on Monday.

Stockbrokers at the Nairobi Securities Exchange. FILE PHOTO | NMG 

IN SUMMARY

  • Standard Investment Bank attributed the latest fall in prices at the Nairobi Securities Exchange to the National Assembly’s move to keep the restriction on the lending rate unchanged. Parliament, however, reviewed the floor on deposit rates, allowing each bank to fix it.

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Prices of nearly all listed banks fell in the five days to last Friday on Parliament’s failure to review the rate cap, with three extending the losses on Monday.

The biggest loser was HF Group #ticker:HFCK whose stock fell 9.15 per cent. The largest commercial banks by market cap and total assets, Equity #ticker:EQTY and KCB Group #ticker:KCB, shaved off 0.56 and five per cent respectively. Only Equity and National Bank #ticker:NBK managed marginal recovery on Monday.

NIC Bank #ticker:NIC share fell 4.84 per cent while Stanbic lost four per cent during the five days. Other banks whose share prices fell were Barclays #ticker:BBK, DTB #ticker:DTK and StanChart #ticker:SCBK while that of Coop Bank #ticker:COOP gained only to lose on Monday.

In its analysis, Standard Investment Bank attributed the latest fall in prices at the Nairobi Securities Exchange to the National Assembly’s move to keep the restriction on the lending rate unchanged. Parliament, however, reviewed the floor on deposit rates, allowing each bank to fix it.

“Generally, banks have continued to experience downward pressure, as investors react negatively to Parliament’s rejection of the proposed rate cap repeal as envisioned in the Finance Bill 2018,” said SIB in its analysis.

KCB’s #ticker:KCB five per cent share price fall wiped out the gains earned year-to-date mainly on foreign investor selling.

“Overall, investors maintained their bearish outlook on bank stocks due to the absence of the rate cap repeal as envisioned in Finance Bill 2018,” said SIB.

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