If you invested Sh100,000 in shares of each of Kenya’s five largest banks at the end of 2009 and held onto the haul to date, you could have made anywhere between Sh11,000 and Sh262,000, depending on the lender you chose.
Shares of large banks stocks have proven to be among the most resilient at the Nairobi Securities Exchange (NSE) #ticker:NSE in the past decade, largely defying the prolonged bear run that set in from 2015 and hurt share prices across board.
Of the top five listed lenders by market capitalisation, Equity Holdings #ticker:EQTY has offered its shareholders the biggest capital gain since 2009 with its value up by a factor of 3.62 times.
This means that an investment of Sh100,000 in the share in 2009 would be worth Sh362,205 today.
It is followed by KCB #ticker:KCB with a gain of 3.11 times, Co-operative Bank #ticker:COOP at 2.42 times, Standard Chartered #ticker:SCBK at 1.24 and Absa Kenya #ticker:ABSA at 1.11 times. These returns exclude the billions of shillings the lenders have paid their shareholders in dividends over the years.
In the period, the blue-chip heavy NSE 20 share index has dropped 42 percent of its value, from 3176 points to 1853 today.
The analysis takes into account the last time one of the five lenders — Co-operative Bank — listed at the end of 2008.
In the intervening period shareholders of the banks, as is the case with some other blue-chip stocks, have also enjoyed bonus share issuances, seen their stocks split and enjoyed some of the more consistent dividend payments seen at the bourse.
The present market capitalisation of the lenders today thus takes into account the bonus share issuances, which are awarded on pro-rata basis depending on the number of shares one holds.
Share splits in the likes of Absa, Equity, and KCB have also helped improve their liquidity at the stock market, backing more active trading on the stocks which helps with price discovery.
Their listing on the MSCI index has also helped give them the visibility and credibility to attract foreign investor interest, providing a base of demand for their stocks that keeps the share prices elevated.Foreign investors prefer liquid, blue-chip counters that can support their large ticket trades easily.The lenders, alongside Safaricom and EABL #ticker:EABL , are the most traded counters on the foreign desk, which accounts for about 55 percent of all traded turnover at the NSE.The ability to stay afloat in a turbulent […]
