Morning Market Brief 22nd November 2018

Corporate News:
Barclays Bank of Kenya Plc (NSE:BBK) 3Q18 results
Barclays Bank of Kenya Plc (NSE: BBK) announced a 2.0% y/y growth 3Q18 profit after tax (PAT) to KES 5.4Bn, in line with our expected KES 5.5Bn. Net interest income (NII) grew 2.1% y/y while non-interest revenue (NIR) was up 14.0% y/y. Unlike other banks that have announced 3Q18 results the bank increased loan loss charges, by 21.3% y/y during 3Q18 following a 22.3% y/y increase in non-performing loans (NPLs) to settle at an NPL ratio of 7.7% similar to 2Q18. 
Against 3Q18 results we maintain a HOLD recommendation on BBK with a target price of KES 10.35.

Diamond Trust Bank Kenya Plc (NSE: DTK) 3Q18 results
Diamond Trust Bank Kenya Plc (NSE: DTK) released 3Q18 financial results reporting a 10.0% increase in Profit after Tax (PAT) to KES 5.6Bn (EPS KES 18.76) from KES 5.1Bn (EPS KES 17.42) in 3Q17. The increase was buoyed by Net Interest Income (NII) which grew 2.9% y/y to KES 14.9Bn, coupled with Non-interest Revenue (NIR) that grew 6.3% y/y to KES 4.1Bn. Consequently, operating income was up 3.6% y/y to KES 19.0Bn. Total operating expenses were muted (-0.1% y/y) at KES 10.8Bn despite a 4.3% y/y rise in staff costs to KES 3.1Bn, while Loan Loss Provisions (LLP) declined 17.3% y/y to KES 2.4Bn. Deposits rose 6.5% y/y (0.2% q/q) and, consequently, the balance sheet grew 7.8% y/y (2.4% q/q). The loan book remained depressed (0.7% y/y) at KES 197.7Bn as investment in government securities surged 17.7% y/y. We recommend a BUY on Diamond Trust Bank at a target price of KES 183.43. This represents an upside potential of 22.3% from the current market price of KES 150.00.

Trading Expectation:
We expect turnover to remain subdued in today’s session with activity still expected to be on the key index counters; Safaricom, Equity and KCB. We see prices of most counters remaining unchanged with no excitement on either buy or sell sides as counters trade on current market prices.

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by Genghis Research