KENYA, AUGUST 23 — The Nairobi Securities Exchange (Plc) has reported a 72.1 per cent rise in its net earnings for the year to June, buoyed by increased commissions from trading activities as the market recorded a tremendous growth.
The Group’s profit after tax closed the six months period ended 30 June 2017 at Ksh133.9 million up from Ksh77.8 million same period last year.
During the period, the self-listed company saw its operating income increased by 24 per cent from Ksh 282.6 million in half-year 2017 to Ksh 351.4 million this year, driven mainly by a 32 per cent increase in equity turnover which grew from Ksh82 billion last year to Ksh108.5 billion.
This reflects the higher trading volumes and share prices appreciation at the Nairobi bourse.
“Market performance was buoyant in the period under review with equity and bonds turnover edging up 32 per cent and 30 per cent to settle at Ksh108.5 billion and Ksh311 billon respectively for the six months ended 30 June 2018,” NSE Chief Executive Geoffrey Odundo said.
During the period under review, The NSE 20 Share Index( which tracks the performance of the top 20 counters at the bourse) decreased by nine per cent to 3,285.73 points from 3,607.18 points last year.
The NSE All Share Index (NASI) however increased by 14 per cent to 174.36 from 152.92 recorded in a similar period last year.
Market capitalization increased by 16 per cent year-on-year to settle at Ksh2.58 Trillion up from Kshs2.22 Trillion as at 30 June 2017.
The growth in bonds turnover (which increased to Ksh311 billion from Ksh239 billion) was as a result of of improved yield in the secondary market and increased activity on the infrastructure bonds issued in the period, NSE noted in its financial report.
“The above market performance witnessed an increase in our equity and bonds levies from Ksh 19ó.8 million and Ksh16.7 million for the six months ended 30 June 2017 respectively to Ksh259.9 million and Ksh21.8 million for the similar period in 2018 respectively,” Odundo said.
Interest income increased by 25 per cent to Ksh58.9 million from Ksh 47.1 million last year.
Meanwhile, administrative expenses also increased marginally by nine per cent from Ksh254.7 million last year, to Ksh277.3 million as of June this year.
NSE’s (the company) total assets increased 14 per cent from Ksh2.02 billion in June 2017 to Ksh2.31 billion same period this year,pegged on improved profitability in the period.
“The net cash used in investing activities of Ksh190.8 million mainly includes cash outflows on purchase of treasury bills of Ksh193.1 million, net investment in fixed deposits with maturities over three months of Ksh 26.4 million, capital expenditure of Ksh 25.6 million against interest income received of Ksh58.9 million,” the bourse reported on Thursday.
The macroeconomic environment in Kenya remained relatively stable in the first half of 2018, supported by the government’s continued investment in infrastructure, a stable interest rate and a stable currency environment.
The on-going alignment to the President’s Big 4 agenda portends to have a positive impact to the growth and stability of the economic sectors key among them manufacturing, housing and agriculture hence promoting investor confidence.
Global economic growth on the other hand improved to 3.9 per cent in the first half of 2018 due to the rapid expansion in the Euro Area, Japan, China and the United States.
Recovery in commodity exporters such as Brazil, Mexico and major Sub Saharan Africa countries also provided some support to global output expansion. The upswing in global investments and trade has continued to foster growth during the period under review.
“Given the improved global economic growth thus far, our outlook for the remainder of 2018 is vigilantly positive following improved weather conditions which will support agricultural productivity, water supply and electricity,” Odundo said.
However, low private sector credit growth remains one of the key concerns for economic growth, according to the NSE.
“ A review of the proposed taxes on financial transactions will be critical in enhancing our competitiveness as an attractive Exchange on the continent, we therefore remain cautiously positive on market activity for the remainder of the year,” said Odundo.
He said upgrading of NSE’s equities trading platform is on course and is earmarked to enhance system availability, support the growth of new products and strengthen surveillance capacity at the bourse, as it continues to deliver innovative solutions to stakeholders and provide a robust infrastructure for trading of capital market securities.
“The Nairobi Securities Exchange is witnessing increased interest from potential issuers seeking listing and alternative funding options and our business development initiatives will be centered on working with our partners in the industry to realize these opportunities,” he said.
In the second half of 2018, NSE will be concluding the pilot phase testing of the Derivatives Market with a full launch expected in 2019.
It also plans to increase the activity in equities and fixed markets through engagement with local and international investors as well as promote the awareness of newly introduced products.