Rocky half year for investment firms as earnings dip sharply

Large brokerage firms in Kenya have taken a major earnings hit in the first six months of the year.

The bear run at the Nairobi Securities Exchange (NSE) saw the number of trades decline by 31 per cent in the year to June.

As a result, all investment and brokerage firms that have so far made public their results have registered a drop in profits, with the exception of NIC Securities and I&M Capital.

Firms like AIB Capital, NIC Capital and Alpha Africa Asset Managers soaked in losses.

Renaissance Capital, which has the largest asset base at Sh1.4 billion, saw an 86 per cent drop in its profits to Sh25.9 million. At a similar time last year, the firm made a profit of Sh181.3 million.

The decline was driven by a 33.2 per cent drop in total income to Sh176.9 million, while shareholders’ money reduced by Sh68 million.

For Kestrel, assets dropped by 20 per cent to Sh711.5 million in a period that saw its profits drop by 96 per cent to Sh2.4 million.

The huge drop in net profit was accompanied by a 46.8 per cent drop in total income, which moved from Sh382 million to Sh203 million.

BROKERAGE COMMISSION

AIB Capital saw a 38 per cent drop in its total income to Sh31.9 million this year, from Sh51.9 million in the first half of last year. Its brokerage commission fell by more than half, which pushed the firm to a half-year loss of Sh11.7 million.

AIB, which had booked a profit of Sh431 million over a similar period last year, saw its assets fall by 26 per cent to Sh205.3 million.

NIC Capital returned a net loss of Sh17 million compared to a profit of Sh3.2 million over a similar period last year. Its total income dipped by 58.4 per cent to close the rocky period with Sh14.3 million. The firm’s income from advisory fees dropped more than three times to Sh8.2 million.

However, its sister company, NIC Securities, recorded an impressive performance. In the six months to June, its income more than doubled, pushing it to Sh51.2 million profit.

CUT EXPENSES

This was in contrast to SBG Securities’ performance, where net income reduced by 98 per cent from Sh132 million to just Sh2.4 million.

For I&M Capital, income fell by close to half to Sh166.9 million. However, the firm managed to cut its expenses from Sh1.6 million to just Sh43,307, pulling it out of a Sh0.84 million loss booked in June last year.

It closed the half-year with a profit of Sh74,000, and managed to keep its assets and shareholders’ funds relatively unchanged.

Standard Chartered Investment saw its net profit drop by 12 per cent to Sh68 million on account of increased expenses, which more than doubled to Sh36.7 million.

However, its total income increased by 7.8 per cent to Sh136 million on account of higher interest income. This made it the only one of the reviewed firms that increased its total income.