The National Social Security Fund (NSSF) has acquired an additional 8.55 million shares in popular financial services holding company; KCB Group. The purchase has increased National Social Security Fund (NSSF)’s stake in Kenya’s biggest bank, to 7.99 percent.
According to recent closures the National Social Security Fund (NSSF) which is a pension fund owned by the Kenyan government closed last month with a total of 256.903 million shares in KCB. This is an increase from its previous total in October 2020, of 248.3 million shares or a stake of 7.73 percent.
What the latest shareholding development means is that the National Social Security Fund (NSSF) between the period of April 2020 and December 2020, purchased 31.07 million more shares in KCB at a time when the still ongoing Coronavirus pandemic resulted in KCB’s stock value dropped. The drop however made the financial institution quite enticing to investors who have a long-term look on things.
At the end of March of 2020 the National Social Security Fund (NSSF) had a 7.03 percent stake in KCB. The entry of Coronavirus into Kenya and the resulting lockdowns and preventive measures which inevitably affected the economy at large, also led to the share price for KCB dropping by 29.4 percent at the end of the year.
The purchases by the National Social Security Fund (NSSF) have played a part in local investors raising their collective stake in the bank to an impressive high of 86.59 percent from the 80.91 percent stake it stood at in March of 2020 and the 70.75 percent that was the case at the end of 2017.
Between March 2020 and December 2020 foreign investors sold a total of 182.48 million shares of KCB. When calculated at the current KCB share price of around 36.5 Kenyan Shillings, the 182.48 million shares are valued at 6.6 Billion Kenyan Shillings.
A majority of the shares sales by the foreign investors occurred after the panic trade activities brought on by the Coronavirus pandemic hit the Nairobi bourse from April 2020.
The National Treasury still retains its stake of 19.76 percent in KCB a stake, which was boosted by KCB’s acquisition of the National Bank of Kenya (NBK) in an all stock deal which was carried out in 2020.
All former investors at the National Bank of Kenya (NBK) including the National Social Security Fund (NSSF) and the government, converted their stake into shares of KCB at a rate of 1 share for every 10 shares held.
The purchase of KCB shares by local investors has led to the financial institution’s share price making a comeback from the drop to 30.5 Kenyan Shillings in the middle of August 2020, after the announcement of a drop in profit that reached record lows.
Numerous establishments and institutions like banks have been under immense strain as a result of the drops in profits on higher provisioning for loan defaults which dimmed the dividend outlook.
KCB Group’s net earnings for the 9 month period that ended in September 2020, dropped by 43.1 percent to 10.8 Billion Kenyan Shillings which was additionally weighed down by a piercing rise in provisions for Coronavirus related defaults.
Between March 2020 and October 2020 banks in Kenya, restructured loans that were worth 1.38 Trillion Kenyan Shillings which is 46.5 percent of the total loan book, as a result of the economic struggles brough on by the Coronavirus pandemic and made it even harder for borrowers to pay back their loans.
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