NCBA fuels bank gains as H1 PAT climbs 12.2% on NSE

Key takeaways

• NCBA leads the bank pack after H1 PAT rose 12.2% to 12.4B and the interim dividend jumped 50% to 3.75. Broker notes echoed the strength, with Faida upgrading NCBA to BUY and targeting a price of 42.00.
• Net foreign outflow accelerated to KES 1.3B versus last week’s inflow; participation stood at 31.4% foreigners (locals 68.6%), with top sells including SCOM, KCB, and EQTY — each recording more than KES 200M in sell value.
• The session opened flat after the CBK held the policy rate at 8.75%; top gainers included FTGH and XPRS with gains of 2.02% and 7.24% respectively, while the NASI fell 0.38% WoW and the NSE 20 rose 0.02%. DTK traded near 38.50, with a 52-week high around 41.20, amid cautious positioning around the rate stance.

Market pulse

Turnover came in around KES 1.49B on the NSE, underscoring thin liquidity ahead of key events. The market finished mixed: banks leading the pack, telcos lagging, and the energy complex essentially flat. NASI dropped 0.38% WoW, while the NSE 20 edged up 0.02%. Foreign flows flipped to net sellers of KES 1.3B after last week’s net inflow of about KES 1.1B. Foreign participation remained subdued at roughly 31.4% of turnover, with locals contributing the balance. The session followed a flat opening after the CBK’s decision to hold the policy rate at 8.75%, with traders parsing the implications for lending momentum and equity valuations.

In addition to the headline moves, market structure reflected a cautious mood: system liquidity remains thin, and participants monitored the interplay between rate expectations and growth signals. The week’s backdrop included a continued emphasis on macro cues, including rate stability and evolving inflation dynamics, as investors weighed potential policy guidance from upcoming MPC minutes.

What moved

• NCBA – solid H1 numbers drove bank sentiment higher, with PAT up 12.2% to 12.4B and interim dividend up 50% to 3.75. Broker research highlighted the improvement; Faida upgraded NCBA to BUY with a target price of 42.00.
• SCOM – among the top sells, contributing to sector weakness as foreign selling persisted (over KES 220M noted in the week) and the counter slid roughly 2.1% WoW.
• DTK – traded near 38.50 with a 52-week high around 41.20; market nervousness around CBK’s rate stance supports lending momentum but keeps prices bid/offer tight as liquidity thins.
• Additional notes: AIB is expected to price a KES 5B, 5-year bond at about 13.2% (guidance 13-13.5%), signaling near-term debt issuance activity in the market.

Sector & themes

• Banks posted a modest WoW gain (+0.8%), supported by rate stability and resilient loan growth expectations from the rate-hold backdrop.
• Telcos softened (-1.2%), echoing outflows, while the energy complex stayed flat as power producers digest the rate path and macro cues.
• The macro tilt remains dominated by the El Niño backdrop, priced into agri names like Kakuzi and Limuru Tea, which ticked up about 3% WoW. Foreign flow dynamics continue to color breadth, with investors eyeing MPC minutes for clues on inflation versus growth. Global context noted Middle East tensions keeping oil around $110/bbl, a development CBK flags as an inflation risk, while China’s PMI contraction adds to demand softness for Kenyan tea and coffee.

Risks

• MPC minutes due 15-Aug at 14:00 could tilt the narrative if they hint at inflation pressures or growth headwinds, so market participants will scrutinize the balance between price pressures and growth resilience.
• Liquidity remains thin: equity turnover around KES 1.49B vs 30-day average roughly KES 1.8B.
• Bond yields drift higher; T-bill/T-bond dynamics around the CBK rate (8.75%) continue to influence bank loan pricing and equity multiples. Specifics from recent activity include a 10-year bond auction yield around 12.85% with a bid-cover near 2.1x, and the 91-day T-bill yield around 8.773%.

What to watch next

• MPC minutes release on 15-Aug at 14:00 — assess for balance between inflation pressures and growth resilience.
• SCOM ex-dividend date on 18-Aug — monitor flow shifts around the stock; SCOM’s final payout is KES 1.15 per share.
• Watch DTK for momentum clues as rate stability supports loan growth and corporate appetite for funding; current price around 38.50 with a 52-week high near 41.20.
• Fixed-income cadence and issuance activity: AIB’s planned KES 5B 5-year bond pricing around 13.2% guidance; monitor domestic debt funding dynamics as yields drift.
• Global cues to keep in view: oil around elevated levels due to regional tensions, and US inflation indicators that could shift currency and capital-market expectations.

Informational only, not investment advice.