NSE Hikes Dividend Ratio Despite 40% Profit Slump

Nairobi Securities Exchange Limited (NSE Kenya) has said its full year profit fell by 40%, hit by a decline in equity turnover, which fell by 30% from Kshs. 419 billion in 2015 to Kshs. 294 billion in 2016.

The exchange said net profit for the year ended Dec 31 fell to Ksh 183.8 Million from Ksh 305.7 Million posted in 2015.

However, the self listed exchange appeased investors with an increase in dividend payout ratio by 8.5% to 40% (2015 – 31.5%) and hence the payment of a first and final dividend for the year 2016 of Kshs. 0.27 per ordinary share subject to shareholders’ approval at the Annual General Meeting to be held on 26 May 2017 at the Kenyatta International Conference Centre (KICC).

NSE had previously warned that earnings would fall by more than 25% on reduced volumes of equities which accounts for more than 50% of its total revenue.

As part of a strategy broaden its product offerings geared towards matching the needs of the investors, the company noted it will bring into market; Exchange Traded Funds  on Monday 27th March, while derivative contracts and Global Depository receipts will be launched in the course of the year.

Other Major Highlights

  •  Total income decreased by 11.3% from Kshs. 808.3 million in 2015 to Kshs. 717.2 million in 2016 while Equity trading volumes decreased by 15% from 6.8 billion in 2015 to 5.8 billion in 2016.
  • Interest income declined by 6% from Kshs. 101 million to Kshs. 95 million due to prevailing lower interest rates on deposits held in the year compared to 2015.
  • Other income increased by 120% from Kshs. 43 million to Kshs. 95 million mainly driven by a gain of Kshs. 27 million from the sale of investment in shares and higher market access fees on the admission of a new member.
  • Administrative expenses increased by 9% from Kshs. 448.3 million to Kshs. 487.3 million.
  • Total assets increased nominally by 5% from Kshs. 1.9 Billion in 2015 to Kshs. 2.0 Billion in 2016.

Share Price Performance

On Thursday’s trading session, NSE Kenya share price closed the day at +2.56% to Ksh 11.90.