This archive report was first published on 7 November 2021.
As the Nairobi Securities Exchange (NSE) prepares for the release of banking sector quarter 3 results, analysts are optimistic about the sector's prospects. The results, expected to be released this month, are likely to boost activity at the NSE.
According to AIB-AXYS Africa Research, the banking sector is poised for growth, driven by improved earnings and reduced non-performing loans. The research firm notes that banking stocks are likely to rally on the back of strong Q3 2021 numbers.
Equity Group and Co-operative Bank were among the top movers at the NSE last week, with Equity moving 8.4 million shares at KSh 49.90 and accounting for 22.7% of the week's market activity. Co-operative Bank moved 4.6 million shares, ending Friday at KSh 12.50 and accounting for 3.2% of the week's market activity.
Equity Group's decision to freeze dividend payments in 2019 and 2020 has seen its capital ratios enhanced, positioning the lender to take advantage of opportunities in the East African economy. The lender's expansion into Congo is expected to grow its business by leveraging its strength in lending to SMEs.
Other banks, including KCB Group, Absa Group, and Standard Chartered Bank Kenya Limited, are also expected to perform well, driven by factors such as growing non-funded income, digital banking, and synergies from acquisitions.
However, some lenders, such as NCBA Group and Stanbic Holdings, face challenges, including asset quality concerns and rising costs of risk. Diamond Trust Bank and I&M Holdings also face headwinds, including high staff costs and growing non-performing loans.
