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Kenya Listed Banks Q1’2018 Report

Jun 17, 2018

Following the release of the Q1’2018 results by Kenyan listed banks, the Cytonn Financial Services Research Team undertook an analysis on the Kenyan Banking Sector to point out any material changes from our FY’2017 Banking Report. In our Q1’2018 Banking Report, we analyze the results of the listed banks in order to determine which banks are the most attractive and stable for investment from a franchise value and from a future growth opportunity perspective. The report is themed “Diversification and efficiency key to growth amidst tighter regulation. Asset quality remains a concern”, as we assess what factors will be crucial for the sustainable growth and stability of the banking sector, with banks adjusting their business models in an effort to manage tighter regulation and the tough business envi...

The FY 2018/19 Pre-Budget Discussion Note

Jun 14, 2018

The National Treasury is set to release the 2018/19 fiscal year (FY) budget today (14th June, 2018). As such, a lot of pre-budget discussions are taking place ahead of the official release at 3:00 pm, and we have taken the time to also write a note with our views before the budget is officially released. In this note, we discuss the following: A comparison of the 2018/19 and 2017/18 fiscal year budgets as per the 2018 Budget Policy Statement (2018 BPS), The fiscal year 2018/19 budget estimates as per recent news,

The Draft Financial Markets Conduct Bill, 2018

Jun 10, 2018

In our Focus Note on the interest rate cap review and how it should focus more on stimulating capital markets, published on 13th May, 2018, we highlighted that the Treasury was completing a draft proposal that would seek to address credit management in the economy. The National Treasury thus embarked on two recent possible solutions as follows: proposed a credit guarantee scheme for loans advanced to small and medium size enterprises (SMEs). The proposal is still at an early stage and the amounts and inception date are still not in place, as stakeholder consultations continue, and, developed a draft Financial Markets Conduct Bill, 2018 that will see the establishment of the Financial Markets Conduct Authority that will (a) regulate the cost of credit with...

Rate Cap Review Should Focus More on Stimulating Capital Markets

May 13, 2018

We revisit the interest rate cap following the recent announcement by the Treasury that they were in the process of completing a draft proposal that will address credit management in the economy. Treasury Cabinet Secretary, Henry Rotich, stated that the draft law would not only be centered on the cost of credit, but will also present some consumer protection policies. “The package of reforms is expected to address the real cause of the high credit cost in Kenya, and eventually lead to the elimination of the law capping interest rates,” said Henry Rotich during the launch of the 2018 Economic Survey Report in Nairobi. A repeal of the law was one of the promises made to the IMF, for the extension of the USD 1.5 bn stand-by credit and precautionary facility. The IMF said in a statement, “On March 12, the executive board of the IMF approved Kenyan authorities’ request for a 6-month extension of the country’s stand-by arrangement to allow additional time to...

Cytonn’s Nairobi Metropolitan Area Land Report 2018

Apr 29, 2018

In June 2017, we released the Nairobi Metropolitan Area Land Report - 2017, which focused on the performance of land in 18 suburbs and 11 Satellite Towns in the Nairobi Metropolitan Area (NMA). According to the report, land had increased in value substantially, with the asking prices growing with a 5-year Compounded Annual Growth Rate (CAGR) of 19.4% between 2011 and 2016. The main drivers for the growth were the rapid population growth of 2.6% p.a against a global average of 1.2%, a high urbanization rate of 4.4% against a global average of 2.1% p.a, as well as the robust growth of the real estate sector, which had delivered returns of on average 25.0% p.a over a 5-year period. In summary, the land price performance by zones was as follows; Commercial zones had the highest returns with prices growing by a CAGR of 24.3%,  site and service schemes, grew wit...