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This research report was prepared by the Research Department of Old Mutual Securities Limited. Old Mutual Securities Limited is a securities trading company licensed by the Capital Markets Authority (Kenya) for the purpose of facilitating trade on the Nairobi Securities Exchange.

Here are our views on the news making headlines today for Kenya:
StanChart earnings dip 28 per cent on bad loans. StanChart reported a net profit of Sh1.8 billion in the three months compared to Sh2.5 billion a year earlier. The first quarter performance was subdued largely due to the after-effects of the sharp increase in their non-performing loan book in 2014.

Our View: in FY14A, the bank experienced a negative growth on both the customer deposits (-0.4%) and net loans and advances (-5.3%) on the backdrop of increased competition. SCBK continues to curve a niche on affluent and wholesale banking units through priority banking. Despite these segments getting an outstanding traction, other banks have devised a strategy to compete for a juicy morsel on this niche market including KCB and Barclays Bank both with KCB Advantage and Prestige Banking respectively. Kenya has very few HNWI who can fully exploit some these premier benefit services offered hence this market is at the verge of saturation due to high competition.
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