Kenya’s ‘own goal’ likely to depress bank stocks until after vote
Lenders will probably have to cope with interest-rate caps that have dented earnings and curbed lending until after elections, adding to pressure on their stocks
Kenyan banks will probably have to cope with interest-rate caps that have dented earnings and curbed lending until after elections, adding to pressure on their stocks after the worst January in at least five years. The 11 listed Kenyan banks dropped an average of 14% in January, with KCB Group, Equity Group Holdings and HF Group leading the decline. Caps on the amount banks can charge for loans, introduced in September, are being blamed for the slump. "The rate-cap legislation has been a massive own goal in terms of stimulating growth," Razia Khan, head of Africa macro research at Standard Chartered in London, said by phone. "The near-term outlook for bank returns is not very positive at all. What’s happening is draconian, but it’s unlikely there will be changes before the August elections. " Kenyan President Uhuru Kenyatta approved the caps, against the advice of the country’s central bank and the treasury, to fulfil a campaign pledge he made before coming to power in 2013 that he ...
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