Old Mutual’s Sh23m loss bucks stockbrokers trend

Old Mutual's total income fell from Sh49.6 million in 2012 to Sh24.8 million in June. FILE 

By CHARLES MWANIKI

In Summary

• Old Mutual saw its net loss increase to Sh23 million compared to the loss of Sh4.3 million recorded in the first half of 2012.
• Fellow stockbrokers who have reported positive earnings have been boosted mainly by increased income from brokerage fees.

Old Mutual Securities has extended its losses in the half year ending June 2013, bucking the trend that has seen majority of stockbrokers return improved earnings for the period.

The firm saw its net loss increase to Sh23 million compared to the loss of Sh4.3 million recorded in the first half of 2012.

While total expenses reduced from Sh55.8 million in June 2012 to Sh47.8 million in June 2013, the margins reduced as a result of a bigger fall in income.

Brokerage fees and commissions income fell from Sh32.2 million in 2012 to Sh23.3 million in 2013, leading to total income halving from Sh49.6 million in 2012 to Sh24.8 million in June 2013.

Fellow stockbrokers who have reported positive earnings have been boosted mainly by increased income from brokerage fees.

The stock market rally for the first half of the year has been beneficial to stockbrokers who have made more in commissions arising out of the improved market turnover.

Stockbrokers also stand to gain from the expanding reach of the securities market into previously untapped sectors, especially the SME and real estate markets, with the launch if the Growth Enterprise Market Segment and REITs trading platforms in the first half of the year.

“We expect the introduction of the GEMS in the Nairobi Securities Exchange to effectively enable well managed small and medium enterprises to access the capital markets,” said research and risk firm Stratlink Kenya in its August equities markets review.

Another stockbroker ABC Capital also remained in the red for the half year, although the net loss fell from Sh4.3 million in June 2012 to Sh3.2 million in June 2013.

A Sh5.8 million rise in brokerage commissions was matched by a Sh5 million rise in employee and operational expenses.

The firm’s total expenses stood at Sh14.16 million as at June 2013, compared to income of Sh11 million. Dyer and Blair investment bank and Dry Associates remained in profitability in spite of recording increased expenses.

Dyer and Blair’s total expenses went up by Sh70 million to Sh161 million, eroding the gains from a Sh42.5 million increase in brokerage and advisory commissions for the half year. Net profit reduced from Sh29.9 million in June 2012 to Sh6.8 million this year as a result.

Other stockbrokers who have reported a rise in half year earnings have combined the improved earnings from brokerage fees with a continuation of the aggressive cost cutting measures, which began in 2012.

Kestrel Capital at Sh128 million recorded the biggest gain so far in brokerage earnings for the half year, going from Sh94 million in June 2012 to Sh222 million this year.

The firm’s expenses went up as well, however, from Sh109 million in 2012 to Sh161.7 million this year, with net profit up by Sh40 million to Sh54.8 million.