July Review

During the month, various companies released their financial results: EABL announced a 0.84% y/y drop in net earnings to KES 6.96Bn, Centum reported a loss of KES 4.8Bn, and ILAM FAHARI I-REIT saw a 50.9% y/y decrease in net earnings to KES 42.2Mn . Meanwhile, BAT’s 1H21 net earnings increased 0.7% y/y to KES 2.7Bn despite the increase in excise duty on their products. EAAGADS reported a profit of KES 1.8Mn from a loss of 66.7Mn, mainly attributed to increased coffee production and rising coffee prices in theinternational market.

Inflation rose to 6.44 percent in July compared to 6.32 percent in June due to higher food and fuel pricesglobally.

CBK’s Monetary Policy Committee met on 28th July and elected to maintain the CBR at 7.00%. The Committee noted that inflationary pressures are expected to be elevated in the near-term but muted demand pressures are likely to keep headline inflation within the Bank’s target range.

What does August hold for us?

Listed banks are expected to release their half year financial results. Earnings are likely to increase supported by loan growth and reduced provisioning as economic conditions improve.

The uncertainty around the spread of the COVID-19 pandemic poses a threat to economic recovery. However, a revised Covid vaccine plan is at play, with the country betting on increased use of the Johnson & Johnson vaccine expected to arrive in August.