CAPITAL STOCK

NCBA to list additional shares at the bourse

Currently, investors own 652,300 shares of the NCBA worth Sh20.01 million as at the end of October 18

In Summary

•The addition is set to see an increase in share price due to expected increased demand amid a thin supply of stock at the NSE.

•On Friday, the lender's share price at NSE traded at Sh31.95, a 9.61 per cent jump compared to the previous day, meaning increased returns on equity to the investors

NCBA Bank Kenya PLC designate chairman Isaac Awuondo and group MD John Gachora
NCBA Bank Kenya PLC designate chairman Isaac Awuondo and group MD John Gachora
Image: Douglas Okiddy

Listed financial services group, NCBA Group PLC will today list additional shares at the Nairobi Securities Exchange (NSE)  as market analysts predict the firm's per-share price to hit above Sh50 in the long run. 

NIC Group PLC and Commercial Bank of Africa Limited (CBA) began operating as a combined entity earlier this month following approval by the Central Bank Of Kenya and National Treasury on September 27.

On Friday, its share price closed the day at Sh33.95, a 9.61 per cent compared to the previous day, meaning increased returns on equity to the investors.

The introduction of the new shares is expected to increase volumes for the merged entity, making it one of the biggest movers at the Nairobi bourse. 

Currently, investors own 652,300 shares worth Sh20.01 million as of the end of October 18.

As of April, NIC and CBA banks had a combined total share of 1,433,750,468. NIC Bank had 639,945,603 while CBA shareholders had a maximum of 793,804,865).

Before the announcement of the merger, listed NIC Bank's traded at Sh22.7. The shares raised to Sh27.65 in December 2018 on the announcement, then to Sh34.9 in February this year.

The share reached a high of Sh36.35 in March.

According to research by Sterling Capital in April, the target price for the merged business is KSh52.60 per share after valuation on market price and book value. 

 
 

“There is great value in investing in NIC Bank ahead of the merger given synergies that will culminate from the merged entity backed by the track record of management of both the companies, the potential, scalability, and the companies’ financial capabilities," the report stated.

 

The newly merged bank has said it will focus on asset finance and retail banking, leveraging on the strengths of the former two brands and run as the country's third-largest bank by assets base worth Sh44 billion.

NCBA also holds a deposit value of 334.9 billion.

Its shareholders' equity is at 66.7 billion, behind KCB (Sh100.7 billion), Equity with Sh73.6 billion and Co-operative Bank at Sh70.1 billion.

About 34 shareholders of CBA exchanged their shares in CBA for new shares in NIC, owing 53 per cent of the combined entity, while NIC group shareholders hold 47 per cent through a share swap transaction.

Therefore, CBA remains the holding company of the merged businesses.

The Group lays its growth on strong liquidity profile, increased lending capacity and profitability metrics with presence in other Tanzania, Uganda, Rwanda and Ivory Coast.

The bank will be running through M-Shwari and Fuliza (in partnership with Safaricom).

The platform has 30.2 million customers and 15.9 million respectively.