Cytonn cites CFC Stanbic as the best bank for long-term investors

 

In Summary

• CFC Stanbic which ranked best in 3 out of the ten parameters used by the firm to rank the 11  listed lenders was feted best specifically for long term investment.
• Equity bank and KCB closed the list of the top five banks to invest in as National bank and Housing Finance were ranked last in the list of 11.
• The banks had performed well in cost management and quality of lending and the report predicts rapid expansion of the local banks into other regional markets in the near future.

By EDWIN OKOTH
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CFC Stanbic bank has been ranked the best listed bank for investors in the Kenyan financial sector.

The lender beat 10 other banks in a report released by Cytonn Investments on the investment attractiveness of listed banks in Kenya.

Cytonn Chief Executive Edwin Dande said the bank’s business model makes it particularly attractive for long-term investors since it makes more money from non-interest income and has high-yielding business diversity.

“They have a lot of businesses that are mainly lucrative, (and) that means that even at a time the economy goes down they are relatively able to weather the storm given that half of their earnings come from non-interest income. They get a lot of deposits for every branch they open hence have enough room to lend compared to other banks, who engage in expensive deposit mobilization strategies," Mr Dande said.

The ranking that included equal weighted parameters of loans to deposit ratio, cost to income ratio, return on asset capital employed (ROACE), price per tangible book value, non-interest income revenue, camel rating and four other parameters ranked I&M bank second and Standard Chartered bank third.

EQUITY AND KCB

Equity Bank and KCB closed the list of the top five banks to invest in as National Bank and Housing Finance were ranked last in the list of 11.

The worst banks to invest in, however, lead in price to tangible book value, which shows how easy it is to start investment in them as Equity Bank proved most expensive for those planning to start investment in the listed lenders in Kenya.

Shareholders at Equity, however, stand to get the best return as the bank was best on ROACE followed by I&M bank.

The banks had performed well in cost management and quality of lending and the report predicts rapid expansion of the local banks into other regional markets in the near future.

This comes at a time when the Treasury is pushing the capital adequacy rules to increase the stability of the industry.

Cytonn Investments is an alternative investment company specialising mainly in real estate and private equity. The company's chief investment officer, Elizabeth Nkuku, puts their total investments at more than Sh2 billion. The company was formed by former Britam Holdings executives.

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