Nairobi – Equity Group Holdings has been ranked Kenya’s most attractive bank in the Cytonn H1’2022 banking sector report, supported by a strong franchise value and intrinsic value score.
The Franchise Score measures a bank’s broad and comprehensive business strength across 13 different metrics, while the Intrinsic Score measures the potential for return on investment.
The cooperative bank improved to second position in H1 2022, from fourth position in Q1 2022, thanks to an improvement in its net interest margin to 8.4%, from 8.3% in the first quarter of 2022.
Absa Bank took the third position while KCB Group fell from position four in Q1 2022 to position four in Q1 2022 due to an increase in its non-performing loan (NPL) ratio to 21, 4% compared to 16.9% in the first quarter of 2022.
According to the report on “Earnings Growth Means Resilience in the Banking Sector”, the basic earnings per share (EPS) of listed banks recorded a weighted growth of 34.0% in the first half of 2022, compared to a weighted growth of 136.0% recorded in the first half of 2021, while asset quality deteriorated, with the gross NPL ratio increasing slightly by 0.3 percentage points to 13.0% in the first half of 2022 , compared to 12.7% in the first half of 2021.
“The management quality of listed banks, on the other hand, improved, with the cost/income ratio increasing by 3.5% to 53.6%, compared to 57.1% recorded in the first half of 2021, as banks continued to reduce their provisioning levels,” Stellah said. Swakei, investment analyst at Cytonn Investments.
During the period under review, listed banks continued to borrow from international institutions to strengthen their capital position and increase their ability to lend to micro, small and medium-sized enterprises (MSMEs).
The Equity group received 18.6 billion shillings from the International Finance Corporation (IFC) in January 2022.
Additionally, IFC disclosed an agreement to extend Sh18.0 billion to KCB Group in the form of a senior unsecured loan in August 2022.
Commenting on the report, Cytonn Investments analyst Kevin Karobia noted that only one activity in terms of mergers and acquisitions was recorded during the reporting period, as Kenyan banks were eager to spread their risks and reduce their dependence on the Kenyan market by diversifying into other regions. in the mainland.
“In light of the above, KCB Group PLC has announced that it has reached a final agreement with the shareholders of Trust Merchant Bank (TMB) to acquire an 85.0% stake in the Democratic Republic of Congo-based lender (DRC),” Karobia said. .
Listed banks recorded a weighted average deposit growth of 11.3% lower than the 18.4% growth recorded in the first half of 2021, indicating a reduction in investment risk in the business environment.
Unfunded revenue increased 24.4% compared to the 19.2% growth recorded in the first half of 2021, attributed to the faster growth in fees and commissions of 18.0% compared to the growth of 16, 6% in the first half of 2021.
The performance of the banking sector in the first half of 2022 was shaped by regulation, regional expansion through mergers and acquisitions, asset quality and capital raising.