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Recent Topicals

Interest Rates Cap Is Kenya's Brexit – Popular But Unwise

Aug 21, 2016

This week’s focus note is about the ongoing debate on interest rate caps. The Kenyan public is lately very angry with Kenyan banks for a whole list of reasons - we have had recent bank failures but there isn’t a single ongoing prosecution, livelihoods and investment deposits lost or locked up in failed banks, investments lost in bank bonds such as Chase and Imperial Bank bonds, value of investments in bank shares have almost been halved, and yet banks continue to charge high interest rates on loans coupled with low interest rates paid on deposits. Trust for the Kenyan banking sector is at its most recent low. The anger has culminated in the Kenyan people delivering an interest rate cap bill that has broad base support and is now only awaiting presidential signing to become law. We compare the interest rate cap bill to Brexit – a very populist move, fueled by anger, but an equally unwise move that we may quickly regret.Our view is that interest rate caps would have a clear neg...

Technology & Investments

Oct 27, 2019

Technology has continued to be a disruption in the investment industry, both in Kenya and globally, thus, following our Fintech Impact on Kenya’s Financial Services Industry report on technology in financial services, in this week’s report we focus specifically on investments. One of the most tangible disruptions is the ability that technology provides to make investments easier to access, be it through a website or mobile phone. From the comfort of your phone, you can now access an investment company’s website or application, make an investment or withdraw an investment. This was not possible a few years ago where you had to visit a brick and mortar branch to create an investment account and manage your account. All these aspects of modern investing are relatively recent disruptive innovations being used by firms to remain competitive in a market where clients are no...

End of Interest Rate Caps?

Oct 20, 2019

This week, we revisit the interest rate cap topic following the recommendation by President Uhuru Kenyatta to repeal the Interest Rate Cap, in a memorandum to Parliament in which he declined to assent the Finance Bill, 2019 into law. This is the strongest directive thus far by the government on the repeal of the interest rate cap and could mark the abolishment of the current regulated loan-pricing framework. We, therefore, revisit the issue of the interest rate cap, focusing on: Background of the Interest Rate Cap Legislation - What Led to Its Enactment? A Recap on Our Analysis on the Subject A Review of the Effects It Has Had So Far in Kenya Recent Developments Next Steps, Options for the Legislature on the Finance Bill, 2019, and Our Views, Expectations, and Conclusion Section I:  Introduction

Focus of The Week: Cytonn’s Kenya Retail Real Estate Sector Report 2019

Oct 13, 2019

In October 2018, we released the Kenya Retail Sector Report - 2018, themed “Retail Sector Recovers in Key Cities Except Nairobi”, which focused on the performance of the retail real estate sector in Kenya in 2018. According to the report, the retail sector in Kenya recorded improved performance across all major cities in Kenya with the exception of Nairobi, which recorded a decline in rental yields by 0.2% points to 9.4% in 2018 from 9.6% in 2017. This week, we update those findings with our Kenya Retail Sector Report - 2019. The report is based on findings from research conducted in 8 nodes in the Nairobi Metropolitan Area, as well as key urban cities and regions in Kenya, including North Rift, Coastal Region, Western/Nyanza, and Mt. Kenya. The report highlights the performance of th...

Kenya Listed Banks H1’2019 Report

Sep 29, 2019

Following the release of H1’2019 results by Kenyan banks, the Cytonn Financial Services Research Team undertook an analysis on the financial performance of the listed banks and identified the key factors that drove the performance of the sector. In this report, we assess the key factors that influenced the performance of the banking sector in the first half of 2019, the key trends in the sector, the challenges banks faced, and areas that will be crucial for growth and stability of the banking sector going forward. As a result, we shall address the following: Key Themes that Shaped the Banking Sector in H1’2019; Performance of the Banking Sector in H1’2019; and, Outlook and Focus Areas of the Banking Sector Players Going Forward. Section I: Key Themes that Shaped the Banking Sector in H1’2019: The first half of 2019 has been characterized by consol...