Kestrel beats Dyer and Blair to top stockbroker rank

Dyer and Blair Investment Bank booked the highest commissions in the first half of last year, but has been overtaken by Kestrel Capital this year. FILE 

By CHARLES MWANIKI

In Summary

• Dyer and Blair saw its earnings from brokerage commissions rise by 136 per cent to Sh222 million as at the end of June.
• Brokerage commissions have risen sharply in the first quarter of 2013, helping the brokers to turn around loss positions and move to profitability.

Kestrel Capital has earned the biggest share of stockbrokerage commissions in the first half of the year, reflecting increased dominance of foreign trading desks among the market intermediaries.

The investment bank saw its earnings from brokerage commissions rise by 136 per cent to Sh222 million as at the end of June, turning the tables on traditional powerhouse Dyer and Blair Investment Bank, which booked the highest commissions in the first half of last year.

Brokerage commissions have risen sharply in the first quarter of 2013, helping the brokers to turn around loss positions and move to profitability.

“General economic strength, political stability and favourable interest rate regime have generally boosted business performance. The market is still driven largely by institutional investors, both local and foreign, with retail participation beginning to return,” said Kestrel Capital chief executive Andre DeSimone in an interview.

Kestrel Capital has in recent years attracted the biggest share of transactions originating from foreign investors, who now account for nearly half of daily turnover.

Dyer and Blair recorded a modest increase in commissions in the first six months of the year to Sh205 million from Sh198 million in June 2012.

Africa Alliance booked Sh188 million in commission income up from Sh114.5 million in June 2012.

Renaissance Capital recorded the second biggest brokerage commission gain in percentage terms, after Kestrel Capital, having realised a 112 per cent jump to Sh159.2 million.

(READ: Stockbrokers get profit boost from surge in turnover)

Unlike last year when almost all brokers reported reduced employee costs, some like Dyer and Blair, African Alliance and Standard investment bank have recorded increased staff expenses in the first half of the year.

Of the 14 firms that had as at Friday made public their 2013 half-year numbers, seven had cut employee costs while a similar number had increased theirs.

Kestrel Capital cut employee costs by about Sh2 million, but overall expenditure went up by Sh52 million to stand at Sh161.7 million, mainly on account of an increase in direct expenses.

In terms of overall expenses, 11 saw an increase while only three—Renaissance Capital, Old Mutual Securities and Suntra Investments—managed to bring down their total costs.

Payroll costs constitute a lower percentage of the total costs for the 14 stockbrokers that have reported their half-year performances so far compared to June 2012, coming in at 31 per cent compared to 34 per cent, mainly due to the increase of other direct expenses.

In the first six months of 2012, 10 out of the 21 market intermediaries had cut their employee costs, eight of them by more than 15 per cent, reflecting efforts to counter the effects of reduced brokerage and transaction advisory commissions.