Kenya | NSE

Earnings Season Begins - In the month of January, we expect FY’22 results from BAT and HY’23 results from EABL. The two companies are perennial dividend paying counters, however, the increased cost of input raw materials coupled with tough economic times reducing sales revenue are likely to see a reduction and/or slower profit growth. That not withstanding, we expect the two counters to still pay dividends with BAT ( an additional final DPS of KES 50.00) and EABL ( an interim DPS of KES 3-5.00).

During the month, listed commercial banks released their 3Q22 financial results. The results signalled recovery in the banking sector as the lender’s asset quality improved albeit still a concern with the Cost to Income Ratio Less provisioning well above the 40% mark for majority of the banks . Most Lenders recorded a significant increase in Non-Funded Income compared to Net Interest Income mainly driven by increased income from fees and commissions on loans and advances. The ongoing dollar shortage on the forex market created market inefficiencies for the lenders, as seen by the significant growth of forex trading income. Despite the stellar performance recorded during the quarter, only two banks declared an interim dividend, KCB & SCBK.

ABSA Group released their Q3’22 earnings results posting a 29.61% & 30.07% climb in EPS & PAT respectively to KES 1.97/share and KES 10.71Bn respectively driven by a 25.30% increase in net interest income and a 16.44% growth in non-interest income. Trailing ROaE & ROaA improved to 11.56% & 1.49% respectively in 3Q22.NIMs remained adequate at 7.09% while the profit margin edged up 638bps q/q to 32.03% in 3Q22. Factoring in the growth from previous quarters, we foresee the lender closing the year with a PAT of between KES 11.00Bn – 14.00Bn.

NCBA Group released their Q3’22 earnings posting a 96.21% & 96.20% climb in EPS & PAT to KES 7.77 and KES 12.80Bn respectively driven by a 15.07% increase in net interest income and a 40.14% growth in non-interest income. Trailing ROaE & ROaA improved to 21.19% & 2.85% respectively. NIMs remained adequate at 5.96% while the profit margin edged up 429bps q/q to 27.96%. Factoring in the growth from previous quarters, we foresee the lender closing FY’22 with a PAT of between KES 14.00 - 17.00 Bn.

Diamond Trust Bank Group released their Q3’22 earnings results posting a 19.04% & 19.05% climb in EPS & PAT respectively to KES 20.57/share and KES 5.75Bn respectively driven by a 14.10% increase in net interest income and a 43.48% growth in non-interest income. Trailing ROaE & ROaA improved to 8.05% & 1.18% respectively in 3Q22.NIMs remained adequate at 5.59% while the profit margin edged up 31bps y/y to 26.58% in 3Q22. Factoring in the growth from previous quarters, we foresee the lender closing the year with a PAT of between KES 5.00 - 7.00 Bn

Standard Chartered Bank released their 3Q22 earnings results posting a 37.11% climb in EPS & PAT to KES 22.61 and KES 8.71Bn respectively driven by a 7.29% increase in net interest income and a 16.11% growth in non-interest income. Trailing ROaE & ROaA improved to 14.37% & 2.24% respectively in Q3’22.NIMs remained adequate at 6.40% while the profit margin edged up 6.94% points q/q to 35.47%. Factoring in the growth from previous quarters, we foresee the lender closing the year with a PAT of between KES 10.00 – 12.00 Bn