Nairobi Securities Exchange (NSE) profits for the half-year ended June 2020 grew massively by 357 per cent to Ksh110.7 million compared to Ksh24.3 million recorded in a similar period last year. The exchange says they adopted a cost optimization strategy that aimed to increase income from non-core revenue streams that paid off as it cushioned the firm from revenue erosion risks.
Revenues for the period declined 1 per cent to Ksh292.3 million from the Ksh295.9 million in the first half of 2019. Interest income declined 22 per cent to Ksh 36.7 million from Ksh47.2 million in a similar period last year.
NSE reduced administrative costs by 30 percent to ksh237.8 million in the six months from Ksh339.4 million in 2019 due to the cost optimization strategy that saw Ksh78 million reduction in staff related costs.
Key performances
Between January and 30th June 2020, equity turnover grew 6.5 per cent to Ksh83 billion from the Ksh78 billion recorded in a similar period in 2019.
The listed New Gold ETF was the best performing asset class registering an 8000 per cent growth in turnover compared to a similar period last year. NSE says that the GOLD ETF value grew 38 per cent on a year-to-date basis owing to its defensive nature to volatility. In the period under review, investors ran to the Gold ETF considered a safe haven due to volatility in global markets.
However, the bond market turnover dipped 18.3 percent in the first half of 2020 to Ksh293 billion from the Ksh359 billion in the six months ended June 30 2019. The decline is attributable to reduced secondary activity on the marker despite an increase in issuance of sovereign bonds in the primary market. In the period under review, the Government of Kenya was given a negative sovereign credit rating from Fitch Rating and Moody’s Agency further deteriorating the bond market.
NSE notes that selling pressure from international investors saw the NSE 20 index plunge 26 per cent while the NSE All-Share Index fell 8 per cent in the six months.
New Board Chairman
In the period under review, NSE had a change of guard as Kiprono Kittony took over as the board chairman. Kittony takes over from Samuel Kimani who stepped down on July 13, 2020, after steering NSE’s board for the past eight years. Kimani will remain on the board as Independent Non-Executive Director for one more year.
Mr Kittony holds both a Bachelor of Commerce (B.Com) and a Bachelor of Laws (LL.B) degree from the University of Nairobi and a Global Executive MBA from the United States International University (USIU).
Under Kimani’s leadership, there were milestones such as upgrade of the Equities Trading System, launching of new market segments including the Derivatives Market, the Green Bond Market, Ibuka and the launch of the mobile traded Government Infrastructure Bond; M-Akiba.
Operating environment and outlook
In a statement, the Chief Executive Geoffrey Odundo notes that in the half-year global markets remained subdued due to economic pressure due to the spread of COVID-19. On the domestic scene, the Kenya Shilling weakened 7 per cent against the US dollar due to increased demand from importers. Furthermore, there were supply chain disruptions with travel restrictions affecting remittances from agricultural exports and tourism in the period under review.
NSE maintains a stable outlook for the second half of the year driven by prospects of a gradual economic recovery and efficiencies in containing the COVID19 pandemic. The bourse reiterates commitment to business continuity focused on providing uninterrupted market availability to investors through initiative such as remote access by trading participants.
The Board did not recommend the payment of an interim dividend for the first half of 2020.
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