2 September 2014

Kenya: Brokers Realise Mixed Earnings in First Half

STOCK brokerage firms posted mixed fortunes in the first half of the year to June, the same period that the Nairobi Securities Exchange Ltd reported net earnings tumbled 30.6 per cent to Sh107.3 million.

The NSE, set to self-list on Monday, is owned 90 per cent by 22 brokers whose income mainly comes from brokerage commissions and consultancy fees.

CfC Stanbic Holdings' owned SBG Securities, a major actor with a 15.9 per cent market share, recorded an 83 per cent growth in after tax profit to Sh139 million after commissions climbed 61 per cent to Sh290 million.

Standard Investment Bank, another big player at the bourse, realised a 10.3 per cent per cent to Sh17.1 million on a massive 141.8 per cent rise in commissions to Sh175.6 million.

Dyer & Blair similarly experienced a significant 157.9 per cent climb in net profits to Sh17.8 million after commissions rose 11.1 per cent to Sh228.3 million. Sterling Capital managed Sh15 million in profitability, more than double the Sh6.2 million in the same period last year.

"The first half was slightly better than in 2013 where foreign investors adopted a wait and see attitude," Sterling Capital CEO John Kirimi said in a telephone interview yesterday.

It was however not a party for all the intermediaries as some saw net earnings contract, largely on increased competition limited to equity and bond transactions.

Faida Investment Bank suffered a 54.4 per cent loss to Sh5.65 on rising operating expenses and dipping consultancy fees, dampening a 16.9 per cent rise in commissions to Sh102.3 million.

AIB Capital also made it the losers' list with net earnings sliding 28.3 per cent to Sh1.7 million, commissions fell 14.2 per cent to Sh39.3 million, with consultancy fees mitigating the situation with Sh5.2 million up from Sh450,000 a year earlier.

"The industry is small and we are all struggling for a part of the little cake," Kirimi said. "The industry performance will be much better when new products like commodities and derivatives are introduced."


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