The Nairobi Securities Exchange (NSE) has released its financial performance for the first half of 2022, a period that the exchange saw lower than expected trading activity especially from the international and domestic institutional investors.
During the 6 month period, the NSE as a Group reported a decline of 24% in profit before tax to Ksh 85.8 Million while Profit after Tax fell by 48% to Ksh 40.2 Million from Ksh 77.3 Million in H1 2021.
The exchange, one of the largest in Africa, derives most of its income from charging levies of trading equities and bonds. During the period, its commissions from equity trading fell by 22.4% from Ksh 167 Million for H1 2021 to Ksh 129.8 Million in H1 2022. Equity turnover for the period stood at Ksh 54 Billion in H1 2022, compared to Ksh 69.7 Billion in the same period in 2021.
In a statement to market stakeholders, the NSE says that at the close of H1 2022, equity turnover decreased by 22.41% to stand at Ksh 54 Billion compared to Ksh 69.7 Billion recorded in H1 2021.
“The decline in equity turnover was attributable to a reduction in trading activity mainly from international and domestic institutional investors. This was as a result of international institutional investors reallocating capital to global fixed income assets, whilst domestic institutional activity declined owing to reallocation of capital to domestic fixed income assets. Bonds market turnover declined by 17.85% in the first half of 2022 compared to a similar period in 2021. As at June 30 2022, total bonds turnover stood at Kshs. 387 Billion compared to Kshs. 471 Billion recorded over a similar period in 2021.” The NSE noted.
The NSE market cap stood at Ksh 1.94 Trillion compared to Kshs. 2.7 Trillion recorded over a similar period in 2021 while the total value of outstanding bonds stood at Ksh 3.59 Trillion.
The exchange’s bond trading levies also decreased by 17.8% from Ksh 32.9 Million in H1 2021 to Ksh 27.1 Million in H1 2022. The NSE said this was as a result of reduced secondary trading activity due to increased market yields offered in the primary market.
Total expenses for the group increased by 7% to Ksh 275.1 Million in H1 2022 as the NSE increased activities related to market lobbying and advocacy.
The NSE’s total assets decreased slightly by 4% from Ksh 2.44 Billion in H1 2021 to Ksh 2.34 Billion as at H1 2022. The Group said this was as a result of a write down of its fixed assets and payment in 2021 of a total Kshs 267 Million on the 2020 final dividend and 2021 special dividend.
Nairobi Securities Exchange H2 Guidance
In the second half of 2022, the management of NSE expects trading to return to normalcy after completion of the election process, which affected investor sentiments and trading activity.
“The Exchange will continue to engage prospective issuers to consider capital markets financial solutions to fund their business growth and development. With the increase of issuances in the corporate bond market, we will continue to interest companies to use this product to complement their funding needs.” The CEO of the NSE Geff Odundo noted.
READ; Nation Media Group Half Year 2022 Profit Drops Slightly
