Nairobi Securities Exchange posts Sh110.7m net profit

By Lewis Njoka
Friday, August 28th, 2020
Nairobi Securities Exchange. Photo/PD/FILE
In summary
    • The bourse expects economic and market performance in the second half of the year to remain stable driven by prospects of a gradual economic recovery, effectiveness of the government’s stimulus programme and efficiencies in containing Covid-19 pandemic both in Kenya and across global markets.
    • It plans to continue implementing its business continuity plans which place special focus on among others, ensuring uninterrupted market availability to investors.

Lewis Njoka @LewisNjoka

Nairobi Securities Exchange (NSE) defied Covid-19 shocks to post over 100 per cent jump in after tax profit during the first six months of this year. 

The bourse made Sh110.7 million profit after tax compared to the Sh24.2 million it posted same time last year, it said in a notice yesterday.

Geoffrey Odundo, NSE chief executive attributed the impressive performance to cost optimisation and increased income from non-core revenue streams.

“The Group delivered resilient results against a challenging macro-economic environment in the first half of the year.

This growth was driven by a cost optimization strategy and focus on increasing income from non-core revenue streams to cushion the business from revenue erosion risk caused by Covid-19,” said Odundo.

According to Odundo, administrative expenses decreased by 30 per cent from Sh339.4 million to Sh237.8 million driven mainly by the cost optimisation strategy which resulted in a Sh78 Million reduction in staff related costs.

The performance was despite revenue decreasing marginally, by one per cent, to Sh292.3 million down from Sh295.9 million same period last year.

Interest income

Interest income decreased by 22 per cent to stand at Sh36.7 million down from Sh47.2 reported end of June 2019 with NSE attributing the decline to the utilization of deposits on acquisition of strategic investments in the year 2019. 

On the other hand, other incomes rose by 78 per cent to stand at Sh37.7 million up from Sh21.2 million reported same period last year.

The growth emanated from Sh6 million dividend received from strategic investments, Sh6 million gain on a trading investment portfolio and Sh4 Million bargain purchase price on additional shareholding acquired from a subsidiary.

Total company assets increased marginally by one per cent to stand at Sh2.31 billion up from Sh2.29 billion as at 30 June 2019 due to an increase in prepayments which will be amortized by the yearend. 

NSE achieved the improved performance in a tough business environment characterised by currency volatility, supply chain disruptions and increased fiscal risks due to the pandemic.

“During the period under review, the currency environment remained volatile evidenced by a seven per cent depreciation of the Kenyan shilling against the US dollar as demand for the US Dollar to cover import bill increased,” said Odundo in the statement.

Fiscal risk

“Further, there was significant increase in sovereign fiscal risk due to reduced tax revenues and increased obligations to finance critical services such as health bolstering the need for increased borrowing by the Government,” he added. 

NSE’s 2020 half year performance is a welcome relief compared to last year where the self-listed company issued a profit warning after full year profits dipped by more than 25 per cent.

This was due to a challenging economic environment and reduced inflow of capital from global frontier market investors, according to the bourse.

However, NSE expects economic and market performance in the second half of the year to remain stable.

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