Kenya banking stocks fall for third session as bargain hunters creep in

An investor monitors trading at the Nairobi Securities Exchange. PHOTO | FILE 

By GEOFFREY IRUNGU and REUTERS

In Summary

• There were tens of millions of shares in supply even as the demand remained low, underlining the nervousness of investors at the Nairobi Securities Exchange.

Kenyan bank share prices continued to fall on Monday, losing the allowed maximum of 10 per cent by 11am (0800 GMT).

KCB Group, Kenya's biggest bank by assets, Equity Bank, the biggest in terms of number of customers, and Co-operative Bank lost 9.32, 9.26 and 9.26 per cent respectively. I&M and NIC shed off 9.77 and 7.29 per cent respectively.

StanChart and Barclays were the only listed banks that gained in price at 4.76 and 2.34 per cent above last Friday’s prices to stand at Ksh198 and Ksh8.75 per share.

There were tens of millions of shares in supply even as the demand remained low, underlining the nervousness of investors at the Nairobi Securities Exchange.

The drastic decline of banks’ share prices began last Thursday, falling by the maximum rate of 10 per cent. This continued the following day, last Friday where the share lost another 10 per cent.

The massive fall in bank share prices came after President Uhuru Kenyatta signed a bill controlling interest rates.

The lending rate is now supposed to be a maximum of 14.5 per cent and deposit rates are supposed to be at 7.35 per cent at a minimum, where the Central Bank Rate is the base rate.

Businesses in the East African country have complained that high rates, which average 18 per cent or more, hobble corporate investment. Analysts, however, have said capping rates may be counterproductive as it makes banks less willing to lend.