This archive report was first published on 31 October 2019.
On October 31, 2019, the Nairobi Securities Exchange witnessed a significant surge in banking shares, with the lenders' stock gaining Sh38.3 billion in a single day.
The increase in share prices was attributed to the news that Parliament's finance committee had asked MPs to repeal a cap on commercial lending rates, which had been in place since 2016.
Eight out of the 10 banks listed on the NSE gained on the expectation of increased profitability and stock gains, with Equity Bank's share price rising by 6.5 percent, adding Sh10 billion to its investors' wealth.
Other banks that saw significant gains include KCB, Co-operative Bank, NCBA, I&M Bank, Barclays, and Standard Chartered, with their shares rising by 6.8 percent, 8.5 percent, 8.8 percent, 4.3 percent, 3.3 percent, and 1.4 percent, respectively.
Analysts expect the removal of the rate cap to lead to increased lending and bank profitability, with investment bank AIB Capital predicting a rise in lending and bank profitability based on higher margins on loans.
Parliament will vote on whether to accept the finance committee's recommendations on Tuesday, with lawmakers having the option of removing the cap from the Bill or overruling the President if two-thirds of the 349 members vote to override his position.
