Co-operative Bank’s 1H21 net earnings rose 2.33% y/y to KES 7.37B, above our forecast of KES 6.3B, fueled by a 19.02% y/y increase in interest income, and 24.27% increase in NFI to KES 18.83B, despite a 122.97% y/y surge in loan loss provisions to KES 4.16B. Growth in NFI was mainly attributed to rising income from fees and commissions due to increased mobile lending activities.
KCB Group’s 1H21 PAT surged 101.92% y/y to KES 15.30B, above our forecast of KES 9.80B, fueled by a 13.86% y/y increase in interest income to KES 47.12B, a 5.94% y/y increase in NFI to KES 14.79B, and a 40.30% y/y drop in loan loss provisions to KES 6.58B. KCB’s Board of Directors did not recommend the payment of dividends as they sought to conserve cash.
Equity Group’s 1H21 net earnings rose 97.7% y/y to KES 17.94B driven by sustained growth in operating income and a 63.7% y/y drop in loan loss provisions to KES 2.91B. This was above our expectations on the back of improving economic conditions.
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.
EABL’s profitability remained relatively flat during the period. Net revenue edged up 14.7% y/y to KES 85.96B, above our forecast of KES 77.94B, mainly driven by growth in sales across its markets. Net sales in Kenya, Uganda, and Tanzania were up 10%, 33%, and 15% y/y respectively. While PAT remained relatively flat, EPS increased 6.6% y/y to KES 5.51 as a result of EABL increasing its stake in Serengeti Breweries Limited which led to an increased benefit to shareholders.
According to the World Bank, the global economy is expected to expand by 6% in 2021 largely on the back of strong rebounds from a few large economies with US growth expected to reach 6.8%, and China, 8.5%. This growth is likely to be supported by the higher demand and the elevated prices in energy commodities, metals, minerals, and agricultural commodities such as coffee. The uncertainty surrounding the different dangerous COVID variants remains a key risk to the recovery. In Kenya,
there has been a lag in rolling out the vaccines as less than 1.5% of the population are fully vaccinated.
