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:
DTB lending book ranked the best as National Bank trails. DTB non-performing loans are 1.43 per cent of its total loan book compared to National Bank of Kenya’s (NBK) 9.95 per cent.

Our View: NBK’s NPLs stood at 10.6% in FY14A, which is much higher compared to the industry’s average of 5.1% in FY14A. However we expect this to maintain at 10.5% levels going forward as the bank embarks on cleaning toxic assets from its balance sheet while in our view, DTB’s key selling point is its consistency in delivering below sector NPLs (a notable achievement especially after outperforming sector in loan growth in the past 4 years). DTB’s secret on NPLs is having a high (>99%) collateralized book.
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