FY’23 Earnings Season - In the month of July, we await the release of FY’23 results for EABL, Centum and HY results for BAT Kenya. We expect positive results driven by improved performance which will likely be weighed down by increased cost of inputs and higher operating expenses.
Risk-Based Model to Boost Interest Income: In FY’23 and going forward, we expect interest income to rise as banks increase lending to the private sector using a risk-appropriate metric for determining the lending rates. We foresee upside potential for Net interest margins (NIMs) driven by higher lending and government securities yields. The prevailing high-interest environment has created expensive deposit mobilization costs as banks compete with other financial institutions.
During the month, we had FY’23 earnings release from Safaricom where the telco reported a (22.24%) decline in PAT to KES 52.48Bn driven by a significant increase in operating costs as a result of commencement of full commercial operations in Ethiopia, effects of high inflation and the continued depreciation of the shilling. A final dividend of KES 0.62 was declared bringing the total dividend per share to KES 1.20.
Safaricom PLC FY’23 PAT declined 22.24% to KES 52.48Bn driven by a 34.24% increase in operating costs as a result of commencement of full commercial operations in Ethiopia, effects of high inflation and the continued depreciation of the shilling.
FY’22 Earnings Season – During the month, we had earnings releases from Nation Media, Sanlam, Jubilee, Total, Sameer, Crown, TPS East Africa and Bamburi. Nation Media’s FY’22 results were a (35.41%) decline in PAT to KES 0.32Bn driven by lower turnover resulting from a decrease in consumer spending. Sanlam FY’22 net earnings decreased by (11.08%) to KES 8.21Bn driven by poor performance in general business in the wake of difficult macro economic conditions. Jubilee FY’22 net earnings decreased by (5.95%) to KES 20.65Bn driven by lower premiums. Total FY’22 results were a (10.76%) decline in PAT to KES 2.44Bn resulting from higher cost of sales and higher taxes. TPS FY’22 results were a 159.41% increase in PAT to KES 9.38Bn after an increase in sales. Bamburi FY’22 results were a (86.88%) decline in PAT to KES 0.18Bn attributed to a decline in turnover impacted by the slowdown in cement demand. Others that released but without dividend payments were; Eveready, WPP Scangroup, Flame Tree Group, Standard Group, Home Afrika and East African Cables.
FY’22 Earnings Season Continues – In the month of April, we expect further releases of FY’22 results by companies such as Bamburi Cement, and Jubilee Holdings among others. We anticipate lower profits on the back of a tough operating environment in 2022 owing to the increase in the cost of inputs, currency depreciation, and changing consumer preferences.
