The lion finally catches up with the agile 'brown' Equity Bank
KCB hunted down and dislodged its main competitor Equity bank from the food chain and emerged the most attractive bank to investors.
KCB hunted down and dislodged its main competitor Equity from the food chain and emerged the most attractive bank to investors according to the industry performance quarterly report, 2016 by Cytonn Investments.
“The report analysed the results of the listed banks in the past year so as to determine which banks are the most attractive and stable for investment from a franchise value and from a future growth opportunity perspective,” Cytonn chief investment officer Elizabeth Nkukuu said.
“Supported by a strong franchise value and intrinsic value score” the report shows KCB moved a place up from second position in the third quarter of 2016.
Equity bank which was founded in 2014, rose with amazing speed to become one of the most profitable banks in Kenya, but has in the recent past ‘struggled to survive in the jungle’.
Last year it laid off hundreds of its staff in a bid to regain profitability. According to their net profit in the year ended December, the bank reported a 4.1 per cent net profit decline which it attributed to capping of interests.
The linking of Equity bank to scandalous deals in the over one billion loss of tax payers’ money in the National Youth Service scandal seem to have also not inspired confidence in the investors.
Co-operative Bank followed on the footsteps of the Lion and moved one step up to become the second most attractive stock with Equity going down to third.
Diamond Trust Bank moved up one place to fourth position while the biggest mover, moving three positions up from eighth in quarter three 2016, to position five was Standard Chartered.
The Cytonn analysts attributed this to the mid-tier's franchise value. This is further boosted by its high deposits per branch at Sh4.7 billion, which is above the industry average of Sh3.4 billion.
DTB also has a strong tangible common equity ratio of 17 per cent, which is also above the industry average of 14.2 per cent.
Trailing from behind, NIC Bank (9) Housing Finance Group (10) and National Bank (11) were the least attractive in both franchise and intrinsic value score according to the survey, which analyses the business strength of the 11 banks listed at the Nairobi Securities Exchange.
The underlying value (intrinsic) of a lender was assigned a weighting of 60 per cent of overall score, while opportunities for future growth (franchise) accounts for the reminder 40 per cent.
I&M Holdings dropped from fourth to position six, Barclays came in seventh, a drop from sixth while Stanbic Holdings also dropped to position eight from a previous seventh in the latest survey.
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