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Kenya: KCB Market Value At NSE Surpasses $1 Billion Mark
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Business Daily (Nairobi)
1 May 2008
Posted to the web 1 May 2008
The value of KCB at the Nairobi Stock Exchange reached a milestone this week surpassing the $1billion level in market capitalisation indicating the continued gain in stature of the bourse's blue chip firms.
The KCB shares traded at an average of Sh33.50 on Tuesday, taking the bank's market capitalisation to approximately Sh65billion (just over US$ billion). It becomes only the fifth listed company in Kenya to reach that landmark.
KCB group chief executive Martin Oduor-Otieno said the increase in value of the KCB share at the NSE reflected the ongoing growth momentum in the business. "We had a good year in 2007 and we believe this has increased investor confidence in the bank leading to growing interest in the stock," he said.
KCB last week announced a 62 per cent increase in first quarter results of Sh1.65 billion from Sh1.1 billion for the same period in 2008.
David Mataen, director of corporate finance in Faida Investment Bank commented: "It marks the arrival of KCB in the big league of blue chip companies by global capital markets standards.
The more companies in the NSE attain this milestone, the more Kenya becomes accepted as a destination for global investment capital flows. It means that large global investors will now consider KCB as a worthy home for their investment resources." KCB was a major contributor to liquidity at the NSE last year with huge volumes traded on a daily basis
"It is an indication of the market's and investors' confidence in the growth prospects and strategic direction of KCB and in its management's ability to steer the bank towards improved shareholder value," added Mr Mataen.
KCB is seeking regulatory approvals to raise additional capital to support its growth and expansion through a Rights Issue. The timing of the rights issue however has proved to be one of the key determinants of the rights issue's success.
Going a 9th May timetable, KCB will be hoping that investor confidence would have picked up and the Safaricom IPO - which might be a competitor for investor funds-, would have been floated.
After a successful expansion plan, the bank stretched some of the bank's (KCB) ratios with analysts pointing out that without a capital injection the bank's lending capacity is likely to be put under pressure.
Both local and international banking laws require KCB to maintain a minimum level of capitalisation in relation to the size of the money it has lent out to customers and kept as deposits as well.
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Any slowdown in KCB's lending capacity will give its competitors a chance to gain control of the banking sector's lending business amidst shrinking interest income margins.
"This is encouraging interest in the bank from the market which would boost the success of the Rights Issue once we have the necessary approvals to proceed," said Oduor-Otieno.
KCB was the top performing stock in Africa, excluding South Africa, in the week to April 24, according to Nex Rubica data released this week.
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