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Market Report – 19th November 2021


Faida Research - November 30, 2021 - 0 comments

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Features of the week:

DTB Kenya Partners with Crown Motors on Vehicle Financing

  • Diamond Trust Bank (DTB) has partnered with Crown Motor Group to provide vehicle financing to clients purchasing Nissan brands.
  • According to DTB, the deal will see customers access up to 100% financing. The loan is to be repaid in 5 years with an interest rate of 13.0% and turnaround time expected not to exceed 48 hours.
  • There however will not be a repayment holiday for clients on the credit facility that solely covers vehicles currently in store by the auto dealer.
  • The bank seeks to support small and medium sized enterprises (SMEs) with the loan facility.

Commentary:

  • We opine that the credit facility is timely, given that with the easing of restrictions the business environment is improving as indicated by the Stanbic Bank Purchasing Managers’ Index (PMI) – which edged up to 51.4 in October from 50.4 in September.
  • We opine that the increasing consumer demand will boost the SME sector – which had been hit hard by the COVID-19 pandemic and was considered a risky sector to lend to (but will also benefit the banks due to the higher yields).

Results for New FXD1/2021/5 and Re-opened FXD1/2019/20 Treasury Bonds

  • The Central Bank of Kenya (CBK) invited bids for the new FXD1/2021/5 and the re-opened FXD1/2019/20 treasury bonds with the intention of raising KES 50.0 billion for budgetary support.
  • The auction results for the bonds are shown in the table below:
  FXD1/2021/5 FXD1/2019/20 Total
Amount Offered (KES) 50.0 billion
Bids Received (KES) 66.6 billion 17.6 billion 84.2 billion
Performance rate 133.2% 35.1% 168.3%
Amount Accepted (KES) 53.7 billion 15.9 billion 69.5 billion
Weighted Average Rate of Accepted Bids 11.3% 13.4%  
Coupon rate 11.3% 12.9%  

Source: CBK

Equities Market Summary:

Nairobi Securities Exchange Performance

The All Share Index (NASI) and the NSE 20 fell by 1.8% and 1.4% w-o-w to close the week at 168.43 and 1,893.65 respectively. Equity turnover declined by 28.6% to KES 2.5 billion while the volume traded eased by 30.1% to 70.9 million. Safaricom’s price fell by 2.4% w/w to KES 39.25. Co-op’s price fell by 2.0% w/w to KES 12.30 even as the bank released positive results (After profits grew by +18.9% y/y to KES 12.0 billion). Standard Chartered’s price also dropped by 1.3% w/w to KES 128.75 despite positive 3Q2021 results (After tax profits +48.8% y/y to KES 6.4 billion) and announcement of KES 5.0 interim dividend. On the other hand, KCB’s price rose by 3.1% w/w to KES 45.90 following the bank’s release of positive results (After profits grew by +131.2% y/y to KES 25.2 billion) for 3Q2021 and announcement of an interim dividend (KES 1.0).

In the coming week, we expect activity to remain skewed towards the banking sector as investors continue to react to the 3Q2021 results.

 

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