The report, themed ‘Deteriorating Asset Quality amid the COVID-19 Operating Environment’, analyzed the Q1’2020 results of the listed banks and I&M emerged the most attractive supported by a strong franchise value and intrinsic value score.
Cooperative Bank came second emerging top in franchise ranking due to high efficiency levels as evidenced by a low Cost to Income ratio which came in at 58.1 per cent vs an industry average of 61.4 per cen
I&M Bank Tower along Kenyatta Avenue. I&M Holdings has been ranked as the most attractive bank in Kenya during Q1 2020, according to the latest banking report by Cytonn.
Themed ‘Deteriorating Asset Quality amid the COVID-19 Operating Environment’, the report analysed the quarter one 2020 results of the listed banks and I&M emerged the most attractive supported by a strong franchise value and intrinsic value score.
“We note that asset quality deteriorated in Q1’2020 with the gross NPL [non performing loan] ratio increasing by 0.9 per cent points to 11.3 per cent from 10.4 per cent in Q1’2019,this was high compared to the 5-year average of 8.5 per cent,” said David Gitau, Investment Analyst at Cytonn Investments.
Gitau noted that during the period that banks in accordance with International Finance Reporting Standards 9 were expected to provide both for the incurred and expected credit losses and this saw the NPL coverage increase to 57.4 per cent from 54.5 per cent in Q1’2019 as banks adopted a cautious stance on the back of the expected impact of the COVID-19 pandemic.
I&M Holdings also had a high future growth opportunity perspective having a better capacity to generate profits from its core business.
Cooperative Bank came second emerging top in franchise ranking due to high efficiency levels as evidenced by a low Cost to Income ratio which came in at 58.1 per cent vs an industry average of 61.4 per cent.
KCB Group came third and Equity Group fourth with a total expected return of 68.9 per cent and 44.5 per cent respectively
Diamond Trust Bank Kenya took the top position from a future growth opportunity perspective; however, it’s weak franchise score moved it to position 5 on the weighted score.
Absa Bank was sixth, Stanbic came seventh, Standard Chartered took eighth position and recently merged NCBA took ninth place.HF came in 10th position on the back of weak franchise rankings scores as well as a non-promising future growth opportunity perspective as a result of lack of […]
