National Industrial Credit Bank (NIC) share yesterday gained 32.5 per cent to close the day at Sh32 as investors rushed to buy, anticipating higher returns from planned merger with CBA bank.
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.
Real-time stock tracker Nutcracker snipped NIC’s share at Sh24.95 by 9 am having gained Sh2.30 within an hour of trading.
Serial investor at NSE Alloys Chami was jubilant about the surge in share price, but said he was not in hurry to sell.
‘’The Sh7 up in a day don’t happen every day at NSE. This is good news to investors. I however wait for an offer that will come with the anticipated merger,’’ Chami told the Star on phone.
While the bank’s share price has been narrowing, its profits have been on upwards 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 Shh1.98 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.
On Thursday, board of directors of NIC Group and CBA authorized the commencement of discussions regarding a potential merger of the two entities in a joint statement.
‘’Upon successful conclusion of these discussions and subject to approvals from shareholders of the two entities and regulatory authorities it is expected that the envisaged merger would create one of the largest financial services groups in the region,’’ the statement read in part.
The merger of the two banks which have diverse strength with NIC being strong in asset financing while CBA is good in corporate and micro lending through M-Shwari is likely to rumble Kenya’s banking landscape.
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.
Kenya Commercial Bank (KCB) and Equity Bank are biggest banks in Kenya with asset value of Sh684 billion and Sh560 billion respectively.
CBA is however leading in terms of customers, thanks to its M-Swari partnership with Kenya’s leading telco Safaricom.
The platform had disbursed at least Sh230 billion in loans with average amount per customer at Sh3,300. M-Shwari is currently the leading mobile lender, with FSD estimating that at least 29 per cent of mobile owner have borrowed via the platform.