NIC Bank shares yesterday dropped 9.2 per cent to close the day at Sh25, indicating a
slow down in the share purchase ahead of planned merger with CBA.
National Industrial Credit bank and Commercial Bank of Africa announced the planned merger last Thursday, sparking off a rush to buy the share on Friday in anticipation of better yields.
This led to a 32.5 per cent increase on NIC share value to Sh32. Yesterday’s share value is the lowest level since the announcement.
The bank’s share which touched a high of Sh73 in mid-2014 has been on a downward trend, shedding almost 70 per cent in value to Sh22.60 on Thursday when the merger was announced.
While the bank’s share price has been narrowing, its profits have been on an upward trend, growing from Sh17.5 billion in 2014 to Sh23 billion last year.
The lender’s half year profit for the period ended June 30, 2018 however fell two per cent from Sh2.03 billion in 2017 to settle at Sh1.98 billion.
The September 2017 Sh5.5 billion bond restructuring saw the then NIC Bank Limited turn into NIC Group Plc ,a non-operating holding company that oversees the firm’s banking, insurance, securities, capital, leasing and ventures in Kenya, Uganda and Tanzania.
“Upon conclusion of these discussions and subject to shareholders approval, it is expected that the merger will create one of the largest financial services group in the region,” NIC board chair James Ndegwa and CBA chair Destario Oyatsi said in a joint statement.
The two banks had a combined asset value of Sh444 billion according to their half year reports, edging out Cooperative Bank, third largest bank in the country in terms of assets.
Even so, the two banks did not give a definite date for the planned merger. If successful, the merger will see the lender get delisted from Nairobi Securities Exchange.
Last year, NSE lost two firms, Baumann Limited and Hutchings Biemer after they failed to meet Capital Markets Authority regulations.
Hutchings Biemer was suspended from trading on the Nairobi bourse in February 2001 for flouting disclosure rules before eventual delisting in August 2017
On the other hand, Baumann Limited was kicked out for failure to adhere to regulatory requirements from 2008 when the security of the company was suspended.