Interest rate caps, tight liquidity, and low government spending has hit the coffers of lenders as 2017 results start trickling in.
Stanbic Bank and NIC bank may be the only attractive counters in the banking sector as indicators show dismal performance in 2017.
Standard Investment Bank has recommended sell of Equity and Standard Charted counters while advising that the rest, including KCB DTB, Co-op Bank, Barclays Bank and I&M can be held for any new developments.
“We expect a drop of at least 4.4 percent in dividends for StanChart driven by a projected 28.1 percent decrease in earnings per share,” SIB said in a note to investors.
SIB see equity Banks Earnings per Share growing 6 percent, NIC shrinking 2.1 percent while Coop Bank shrinking 1.7 percent. These are likely to impact on what shareholders will earn over the dividend season.
Equity Bank is projected to have the highest cost to income ratio at 52.1 percent, followed by Cooperative at 51.1 percent and StanChart at 47.9 percent.
Kenya Commercial Bank (KCB) which had a cost to income ratio of 49 percent close to SIB’s prediction of 50.1 percent has posted Sh19.2 billion net profits for it Kenyan business a 3 percent.
It took the lenders regional business to bring back the Group’s profits to the level it was last year at Sh19.7 billion.
KCB has offered shareholders Sh3 per dividend while Barclays gave Sh1 per share and Stanbic Bank offered investors Sh5.25 per dividend each despite shrinking profits.