Stockbrokers’ earnings rise to over Sh1 billion

Money Markets

Investment brokers on the trading floor of the Nairobi Securities Exchange (NSE) in Nairobi. PHOTO | FILE 

By CHARLES MWANIKI, cmwaniki@ke.nationmedia.com

In Summary

• Stockbrokers last year made collective net earnings of Sh1.26 billion, a 106.7 per cent increase from Sh608 million in 2013.
• Total income for the year rose by a similar margin to Sh5.6 billion from Sh4.5 billion, mainly from trading commissions.
• Turnover for the year rose by nearly a quarter from Sh2.98 billion in 2013 to Sh3.69 billion last year, mainly driven by foreign investor participation.

Stockbrokers’s net earnings doubled to more than Sh1 billion in 2014, buoyed by a steep rise in trading volumes that translated to larger commissions.

Industry data shows that the stock market intermediaries last year made collective net earnings of Sh1.26 billion, a 106.7 per cent increase from Sh608 million in 2013.

Turnover for the year rose by nearly a quarter from Sh2.98 billion in 2013 to Sh3.69 billion last year, mainly driven by foreign investor participation.

Total income for the year rose by a similar margin to Sh5.6 billion from Sh4.5 billion, mainly from trading commissions.

But the market intermediaries also earned money from returns on investments and sale of stakes held in the Nairobi Securities Exchange (NSE). Earnings from advisory services also grew at a robust pace of 40 per cent to Sh496.4 million.

Market watchers said the increase in earnings was also helped by upward share price movements that drove investor activity.

“The trading environment was better last year. We saw a more volatile market which amounts to higher activity,” said AIB Capital chief executive officer Paul Mwai.

Falling prices can also increase trading volumes from investors looking to take a position on specific counters at a fair price.

Stockbrokers who reported huge increases in net earnings for the year include businessman Jimnah Mbaru’s Dyer & Blair, Faida Investment Bank (FIB), Genghis Capital, Kingdom Securities, Suntra Investments, AIB capital and Francis Drummond.

SBG Securities led the market in net earnings for the second year running at Sh237.8 million, a 26 per cent increase from 2013.

It was followed by Dyer& Blair at Sh178 million (up 713 per cent), Apex Africa Capital at Sh166 million (up 424 per cent) and Suntra at Sh122.9 million (up 1072 per cent).

READ: Equity turnover at the bourse lifts stockbrokers’ earnings

A number of brokers who reported higher profits had, however, included one-off earnings from the sale of NSE shares following the demutualisation and self-listing of the bourse in the last quarter of the year. Each stockbroker held 5.25 million NSE shares at the time of listing.

The shareholder register of the bourse as at the end of December 2014 indicates that six stockbrokers cut their stake in the bourse either by sale or transfer of shares to a different vehicle.

Kestrel Capital’s holding in the bourse shrank by 969,000 shares, AIB Capital’s by 2.39 million and Francis Drummond’s by 2.53 million.