Equities Market Update – 15th August 2025

Market Performance

The equities market maintained its upward momentum, with all indices posting gains:

• NSE 20: +3.9% (best performer)
• NSE 10: +2.8%
• NSE 25: +2.9%
• NASI: +3.2%

Year-to-date (YTD), NASI leads with a +32.2% gain, followed by NSE 20 (+29.7%), NSE 25 (+24.3%) and NSE 10 (+23.9%).

The rally was supported by price gains in large-cap stocks including KCB (+11.7%), BAT (+5.5%) and SCBK (+4.4%). Losses in NCBA (-2.3%) and EABL (-0.5%) provided some drag.

Market turnover rose by 17.4% to USD 18.3 mn from USD 15.6 mn the previous week, pushing YTD turnover to USD 556.9 mn. Foreign investors extended their buying streak for a third consecutive week, recording a net inflow of USD 2.5 mn, up from USD 2.0 mn the prior week. However, YTD, they remain net sellers at USD 24.4 mn (vs. USD 16.9 mn net outflows in 2024).

Corporate Earnings Highlights (H1’2025)

KCB Group

• Core EPS up 8.0% to Kshs 19.6.
• Growth driven by 12.7% increase in Net Interest Income (NII) to Kshs 69.1 bn.
• Asset quality improved: NPL ratio fell to 17.9% (from 18.1%).
• Declared interim dividend of Kshs 4.0 per share (including a Kshs 2.0 special dividend post-NBK sale).
• Return on Equity (RoAE): 23.4%.

Key takeaway: Improved earnings and stronger asset quality, though balance sheet marginally contracted (-0.4%).

Co-operative Bank

• Core EPS up 8.4% to Kshs 2.4.
• Income growth (+10.8%) outpaced by higher operating costs (+13.0%).
• Asset quality weakened: NPL ratio rose to 17.3% (from 16.7%).
• No interim dividend declared.
• RoAE: 18.8%.

Key takeaway: Strong earnings growth and balance sheet expansion, but rising NPLs remain a concern.

Absa Bank Kenya

• Core EPS grew 9.1% to Kshs 2.2.
• Growth supported by sharp 11.5% decline in expenses, despite slight drop in income.
• Asset quality worsened: NPL ratio up to 13.2% (from 11.5%).
• Declared Kshs 0.20 per share interim dividend (annualized yield ~9.8%).
• RoAE: 27.0%.

Key takeaway: Higher profitability driven by cost efficiency, though declining loan book (-3.6%) and higher NPLs weigh on outlook.

Equity Group

• Core EPS jumped 16.8% to Kshs 8.8.
• Earnings lifted by income growth (+3.2%) and lower expenses (-2.2%).
• Asset quality weakened: NPL ratio increased to 15.3% (from 13.9%).
• No interim dividend declared.
• RoAE: 22.8%.

Key takeaway: Strong earnings momentum and balance sheet expansion (+3.0%), though credit quality deterioration is notable.

📝 Summary Insight

The equities market remains resilient, buoyed by banking sector results that showcased strong profitability across KCB, Equity, Co-op, and Absa. While earnings growth and cost management are positives, asset quality deterioration across most lenders highlights underlying credit risk challenges in the economy. Foreign investor sentiment continues to improve, but YTD outflows remain significant.

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