Stock Picks

We recommend a Long Term Buy on KCB. The counter is currently trading at a P/B of 1.40x compared to the average sector P/B of 1.08x. Given the major shift in the banking sector after the introduction of the interest rate cap, we opine that KCB Group will be one of the banks to weather the upcoming storm from shrinkage in margins due to the significant investments done by the group in technology. We expect the Group to focus on alternative banking channels (mobile and agency) to drive loan book growth and to improve efficiency.