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Foreign investors flee KCB, sells sh.11 billion shares

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The Kenya’s leading banking institution at least by assets, Kenya commercial bank -KCB is now dominated by local investors. This comes as foreign investors in a seemingly deliberate move ceded sh.11 billion shares in the past 2 years effectively reducing foreigners’ stake to a paltry of 16 percent in the company.

In the latest shareholder index dated June 2020, the foreigners have total control of 525.59 million shares compared to 896.79 million shares, translating to 29.25 of the totals at hands of foreigners in December 2017.

The latest shareholder index indicates that foreign investors holds smallest stake in KCB behind local investment institutions who holds 37.48 percent, local individuals holding 26.4 percent and the Kenyan treasury at 19.76 percent. In stark contrast the 2017 shareholders index placed foreigners at the top signaling either the investors have lost faith in future prospects of the company or they have been pushed out by the key and influential figures inside the lender.

Needless to say, the spread of the Covid-19 pandemic could have ultimately played a bigger role in letting the investors cede large chunks of their stake. Between and June 2020 for instance, a period that coincided with spread of infections in the country and institution of tough travel restrictions including suspension of international flights, foreigners sold 87.89 shares valued at sh.2.68 billion when calculated using Fridays closing index price, sh.30 in Nairobi securities exchange – NSE.

In 6 months to June 2020, the data from Capital Markets Authority -CMA shows that foreigner’s net sales hit all-time high to sh.21.63 billion. The data lends credence to foreigners’ panic over incurring losses in the events shares plunge due to economic ramifications of the pandemic ranging from job losses, businesses downsizing, profit margins reducing and so on.

In total, foreign investors have sold 371.2 million shares in KCB since December 2017 to June 2020 making local investment institution the biggest winners as they have taken over the position 1 in stake of KCB shares.

The meteoric rise of MPESA has significantly eaten sizable number customers from Kenyan banks opting to save using services like MSHWARI.

In the June end of financial year 2019/2020, KCB posted huge decline in its profits to the tune of 40.1 percent in what executives largely attributed to higher credit risk occasioned by covid-19 pandemic on the economy.


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