Kenya | NSE

COOP Group released their HY’23 earnings results posting a 5.87% y/y and 6.67% y/y climb in PAT and EPS respectively to KES 12.14Bn and KES 2.08 per share respectively. The lenders bottom line growth was driven by a 2.33% y/y growth in net interest income and a 3.95% y/y increase in non-interest income. Trailing ROaE and ROaA improved to 22.16% and 3.58% respectively in HY’23. NIMs remained adequate at 8.22% while profit margin edged up 94bps y/y to 34.32%.

Equity Group released their HY’23 earnings results posting a 7.77% y/y and 7.31% y/y increase in PAT and EPS respectively to KES 26.33Bn and KES 6.75 per share respectively. The lenders bottom line growth was driven by a 16.55% y/y increase in net interest income and a 41.19% y/y increase in non-interest income and weighed down by a 37.40% y/y increase in operating expenses. Trailing ROaE and ROaA declined to 27.85% and 3.22% respectively in HY’23. NIMs remained adequate at 7.19% while the profit margin edged down y/y to 31.77%.

Stanbic Holdings PLC HY’23 earnings results were higher than our expectations. The lender posted a 47.01% y/y climb in PAT and a 47.07% growth in EPS to KES 7.05Bn and KES 17.84 per share respectively driven by a 44.44% y/y growth in net interest income and a 29.74% growth in non-interest income. NIMs remained adequate at 5.66% with trailing ROaE and ROaA declining y/y to 18.79% and3.17% respectively. The board of directors recommended a KES 1.15 interim dividend on the back of improved performance, contrary to expectations, pointing to a higher expected FY’23 total dividend.

HY’23EarningsSeason-We expect the release of HY’23 results from the banking sector and insurance sector, where we anticipate a strong performance from banks, driven by an increase in Interest income and Non-Funded Income. We anticipate an increase in NPLs largely attributable to lending to trade and manufacturing sectors as well as sectors lagging in recovery post pandemic such as Real estate and hospitality. We anticipate lower underwriting profits in the insurance sector on the back of a tough operating environment in 2023.

EABL PLC FY’23 PAT declined 20.87% to KES 12.32Bn driven by a 10.07% increase in cost of sales attributable to higher excise taxes, higher cost of inputs and effects of the difficult macro-economic environment. Revenue marginally increased by 0.22% y/y to KES 109.65Bn attributable to the difficult operating environment. The Kenyan market growth declined by 4.00% while the Ugandan and Tanzanian markets expanded 17.00% and 1.00% respectively. Additionally, EPS declined 16.87% to KES 12.47 with a decrease in the final dividend to KES 1.75 ( interim dividend of KES 3.75) taking the total dividend to KES 5.50 a 50.00% decline from KES 11.00 declared in FY’22.

H1’23 has seen the negative spillover effects from 2022 continue to hamper economic recovery with the further weakening of macro factors consequently leading higher domestic interest rates, heightened geopolitical tensions and slower global economic growth. Globally, inflation in advanced economies continued to ease during the year driven by reduced prices for basket of commodities components, easing of supply chain costs, and a decrease in commodity prices especially crude oil prices. However, core inflation has remained sticky on the higher side showing increased pressure on non-fuel non-food items. Consensus expectations have cut back on recessionary fears with expectations shifting to minor contractions in the coming quarters.