KCB Group emerged as one of the biggest drivers of the Nairobi Securities Exchange’s bullish run last week, with its share price edging closer to the Sh100 mark.
This is after investors responded positively to the lender’s strong half-year performance and plans to raise up to Sh300 billion through a sustainability bond programme.
KCB shares closed the week at Sh94.50, leaving the counter less than Sh6 shy of the psychological Sh100 mark as appetite for banking stocks continued to strengthen.
The rally came shortly after the lender unveiled a five-year Medium-Term Note programme that could mobilise up to Sh300 billion, making it one of the largest corporate debt programmes contemplated in Kenya.
The first tranche is expected to raise up to Sh100 billion, subject to regulatory approval and market conditions.
The programme will be backed by KCB’s Sustainability Bond Framework, which has received a “Very Good” sustainability quality score from Moody’s.
It provides for financing of green, blue and social projects, including renewable energy, clean transport, sustainable agriculture, water management, affordable housing and financing for micro, small and medium enterprises.
KCB Group chief executive Paul Russo said the framework will help the bank turn its sustainability ambitions into a platform capable of mobilising capital at scale.
The proposed programme comes against the backdrop of a strong first-half performance that has strengthened investor confidence in the lender.
KCB’s profit before tax rose 20.8 per cent to Sh49.3 billion in the six months to June, from Sh40.8 billion a year earlier.
Profit after tax increased 14 per cent to Sh36.87 billion, while total income rose 9.5 per cent to Sh108.1 billion.
The lender also expanded its balance sheet by 16.8 percent to Sh2.3 trillion, with customer deposits increasing by 15.1 per cent to Sh1.7 trillion.
Shareholders are also set to benefit, with the board raising the interim dividend by 50 per cent to Sh3 per share from Sh2, translating into a payout of Sh9.64 billion.
The positive sentiment was not confined to KCB.
I&M Group shares gained about six per cent to Sh79 after the bank reported impressive first-half results, extending the strong performance of financial counters at the bourse.
Market data showed I&M among the week’s leading gainers.
The bank entered the period from a position of strength, having recorded a 19.4 per cent rise in first-quarter profit after tax to Sh5.04 billion.
Other financial counters, including Diamond Trust Bank and Kenya Re, also featured among the leading gainers, underlining the dominance of the financial sector in the week’s market rally.
Overall, the equity market delivered a strong performance in the week ending August 20, with the NSE All Share Index (NASI) rising 2.7 per cent, while the NSE 25 and NSE 20 indices gained 2.9 per cent and 2.2 per cent respectively.
Market capitalisation rose by 2.7 per cent to about Sh4.1 trillion, while equity turnover surged 253.8 per cent and the volume of shares traded jumped 229.9 per cent.
The sharp increase in activity pointed to renewed investor participation as corporate earnings and improved market sentiment attracted buyers.
Activity was equally strong in the fixed-income market.
Turnover in the domestic secondary bond market increased 128.9 per cent during the week, reflecting heightened trading activity in government securities even as bond prices remained sensitive to movements in interest rates.
The government’s Treasury Bill auction also attracted strong investor demand.
Bids submitted on August 20 totalled Sh71.7 billion against an advertised Sh28 billion, representing a subscription rate of 255.9 per cent.
The 91-day Treasury Bill attracted Sh37.7 billion in bids, with Sh32.44 billion accepted at an average rate of 8.8 per cent.
The 182-day paper received Sh18.57 billion, of which Sh9.75 billion was accepted at 8.9 per cent, while the 364-day bill attracted Sh15.41 billion, all of which was accepted at an average rate of 9.04 per cent.
The decline in Treasury Bill rates, combined with stronger equity trading and rising banking stocks, points to improving investor appetite for Kenyan financial assets.
