Friday, August 01, 2008

Stellar Numbers from KCB for H1 2008

KCB posted KSh2.46bn PAT for the first half of 2008, 67% higher than prior year. Of the big 4 (BBK, Stanchart and Equity being the others), KCB is the only one that looks to be keeping up with Equity (though the later has now surpassed it in terms of PAT having posted by khs432k more :-)). Interest income was higher driven by KSh20bn growth in loans as well as interest from t-bills (up Ksh7bn). I assume it also benefited from Safcom IPO commissions (Ksh1bn in "other income"). Cost/income ratio has improved though from among the highest in the industry to around 65%.
Price comment: My number one rule when investing in a stock is usually the growth rate of its PAT and how sustainable this is. With these kind of numbers, KCB still remains a buy as it moves into Uganda, Rwanda & Burundi and expands in TZ and very successfully in South Sudan.

Prior to the announcement on NBK, I was running it through my investment thought process, but I think this makes much harder to decide on the way forward. The upside is that reduced GoK involvement is very welcome as it'll mean getting a strategic investor who can hopefully ease it Marimbi out. The downside is that the proposed increase of shares floated on the NSE will have similar effect to a that announcement on KenGen. Ultimately, will have to take a position either way.

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