President Uhuru Kenyatta (left), James Ndegwa (centre) and Equity Group chief-executive James Mwangi. FILE PHOTO | NMG It has been a good year for tycoons owning bank shares like the Kenyattas, the family of former Central Bank of Kenya governor Philip Ndegwa and Equity Group #ticker:EQTY chief executive James Mwangi after each added more than Sh1.4 billion to their wealth.
The surge in the billionaires’ fortunes this year was fuelled by the rise in bank share prices following the removal of the legal cap on commercial lending rates.
Mr Mwangi led the pack after his five percent stake in Equity Bank gained Sh3.2 billion since the start of the year, taking his direct stake in the bank to Sh9.8 billion and underlining his position as one of Kenya’s wealthiest entrepreneurs.
More than 80 percent of the gain or Sh2.63 billion came after October 18 when news leaked that President Uhuru Kenyatta had asked lawmakers to remove the cap on lending rates.
He was followed by the Ndegwa family, whose 12 percent stake in the NCBA Group added Sh1.5 billion this year, pushing their wealth in the bank to Sh6.3 billion.
This reflected a growth of 31 percent, nearly double the 16 percent gain in the market valuation of all Nairobi Securities Exchange listed shares, making the banking tycoons the biggest beneficiaries of the stock market rebound.
The equities reversed a Sh400 billion loss they posted in 2018 to post a paper wealth return of 16 percent or Sh399 billion to hit Sh2.5 trillion.
NCBA emerged following the merger between listed NIC Bank and the private CBA Group, and the merged shares including those owned by the Kenyatta family started trading on the NSE on October 16.
The Kenyatta family, which owns 13.2 percent of the merged bank, has seen its paper wealth in the lender increase Sh1.45 billion since October 16 to hit Sh7.2 billion.
Kenyan bank shares have rallied following the removal on November 7 of the legal cap on commercial interest rates that curbed lenders’ profits.
Investors have rushed to buy the lenders’ stocks at the Nairobi bourse in anticipation of increased gains in coming days as others eye long-term gains in the form of dividends.“The third and fourth quarters of the year saw significant rallies at the NSE especially on bank stocks that had a positive risk sentiment following the repeal of the rate cap.” said Churchill Ogutu, a senior analyst at city-based investment bank Genghis […]