Britam, NCBA Top First Half NSE Performers, Says Report

Financial services group Britam Holdings and NCBA Bank were best performing companies on the Nairobi Securities Exchange (NSE) in the first half of the year based on earnings growth and share price appreciation.

An analysis of markets in sub-Saharan Africa evaluating earnings versus performance showed that Britam’s earnings nearly doubled from Sh376 million in the first half of 2021 to Sh667 million in the same period this year, but it also delivered high share price growth.

Similarly, NCBA Group earnings for the first six months of 2022 surged to Sh7.8 billion from Sh4.7 billion in the same period last year which is a 67.39 percent growth.

The firms helped net earnings at the bourse increase by 17 percent from Sh82.5 billion ($685 million) in the first half of 2021 to Sh96.2 billion ($799 million) in the first half of 2022.

During that period, Britam’s share price also increased by 10 percent while NCBA saw its counter rise by 8 percent, which was higher than most companies.

In the case of Kenyan banks whose earnings grew but their share prices remained low, the analysts at South Africa-based Africafinancial.com said they were wondering whether the banks were getting out enough information to investors.

Financial sector data shows that I&M Bank, Jubilee, KCB and Equity counters lost their value in the period, despite huge earnings, as investors looked for the biggest recovery in the industry.

“Low correlation between earnings growth and share price performance. This raises the question as to whether brokers and investors are analysing companies. Also it appears that most companies are not getting their message through to investors,” said analysts at Africafinancial.

Overall Kenya defied the electioneering period shocks to deliver 17 percent growth in the earnings of listed companies that announced their results for the first six months of the year.

Earnings were largely affected by the election noise that dominated most of the period under review with the exchange rate suffering nearly 10 percent depreciation. 

The NSE however recovered strongly after the elections with investors recovering over Sh100 billion last week alone on increased optimism.

“In Eastern Africa, starting with Mauritius companies, earnings were up 24 percent. Kenya was up 17 percent and Tanzania up 58 percent while Rwanda and Botswana were the worst performing,” says the report.

Earnings on the NSE were up 17 percent which is equivalent to over Sh80 billion in the first six months of the year compared to the previous year.

Mauritius and Tanzania were however the best-performing bourses in Africa as earnings of listed companies soared 79 percent and 58 percent respectively.

The financial experts however said that many companies seem to have grown their earnings but their share prices were still in the mud.

“The low correlation between earnings growth and share price performance poses the question as to whether brokers and investors are analysing companies,” says the report.