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Recent Topicals

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Cytonn Note on the Monetary Policy Committee (MPC) Meeting for May 2019

May 25, 2019

The Monetary Policy Committee (MPC) is set to meet on Monday, 27th May 2019, to review the prevailing macro-economic conditions and make a decision on the direction of the Central Bank Rate (CBR). In their previous meeting held on 27th March 2019, the MPC maintained the CBR at 9.0%, citing that the economy was operating close to its potential and inflation expectations remained anchored within the target range thus the prevailing monetary policy stance remained appropriate. This was in line with our expectations as per our MPC Note, informed by the country’s macroeconomic fundamentals, which had remained stable as well as sustained optimism on the economic growth prospects, as evidenced by: Inflation expectations, which had remained well anchored, within the target range, declining to 4.1% i...

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Investing in Unit Trust Funds

May 19, 2019

Everyone has financial goals that are unique to them and their financial needs.  Personal finance is about meeting personal financial goals, whether it’s having enough for short-term financial needs, owning a home, buying a car, funding education, planning for retirement etc. There are various avenues of investments. In this week’s focus note, we focus on investing in Unit Trusts, also referred to as Mutual Funds. To cover this topic, we shall address the following: What a unit trust is and what investments products it offers, The structure of unit trusts, Industry analysis on the growth of the assets under management, Conclusion: Under this we give our view based on the merits of investing in a unit trust and why one should consider unit trusts for investment. Section I: What is a unit trust and what investments products does it offer? A unit tr...

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Retirement Benefits Schemes in Kenya

May 12, 2019

The Retirement Benefits Industry plays a huge role in the economy. According to the Organization for Economic Co-operation and Development (OECD) in 2017, assets in Retirement Benefits Schemes totaled 50.7% of GDP in the OECD countries and 19.7% of total GDP in the non-OECD jurisdictions. It is clear that most non-OECD countries still have a long way to go in the growth of the sector. In Kenya, the Retirement Benefits Assets as a percentage of GDP stood at 13.4%, compared to more developed markets like the USA at 84.1% and the UK at 105.3%. Over the last decades, we have seen reforms and education initiatives by the Retirement Benefits Authority (RBA) to educate people on the importance of saving for retirement. The industry has registered great growth from both member contribution and good performances leading to the assets under management growing to Kshs 1,166.6 bn in 2018, from Kshs 287.7 bn 10-years ago, translating to a compound annual growth rate of 14.3% over the last 10-yea...

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Kenya Mortgage Refinancing Company Update

Apr 28, 2019

Following the announcement of the formation of the Kenya Mortgage Refinancing Company (KMRC) by the National Treasury Cabinet Secretary, Hon. Henry Rotich in April 2018, we released the Kenya Mortgage Refinancing Company Note, where we introduced the facility and its main functions, highlighted the successes of other mortgage refinance companies in Africa, and emphasized on the conditions necessary for the KMRC to thrive. To recapture the Note, the KMRC is an initiative of the National Treasury and the World Bank, whose main objective is to grow Kenya’s mortgage market by providing long-term funding to primary mortgage lenders. The initiative aims to support the affordable housing agenda by increasing the availability and affordability of housing finance, thus boosting home ownership. Primarily, a mature mortg...

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Kenya Listed Banks FY’2018 Report

Apr 20, 2019

Following the release of FY’2018 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 shaped the performance of the sector, and our expectations for the banking sector in 2019. The report is themed “Growth and Recovery in a tough operating environment”, as we assess the key factors that influenced the improved performance of the banking sector in 2018, the key challenges, and also areas that will be crucial for growth of banking sector going forward. As a result, we seek to answer the questions, (i) “what influenced the banking sector’s performance?”, and (ii) “what should be the focus areas for the banking sector going forward?” as the sector navigates the relatively tough operating environment. As such, we shall address the...

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