NSE defies markets slack to grow profits by four-fold
The Nairobi Securities Exchange (NSE) has announced a 455 per cent growth in half year profit to Ksh.110.5 million against the odds of a lack-lustre investment environment.
The remarkable growth in earnings is largely attributed to cost-cutting initiatives including a recent staff rationalization exercise.
Administration costs were subsequently trimmed by 30 percent to Ksh.237.9 million from Ksh.339.4 million last year.
Staff costs declined by Ksh.78 million to bring down the contribution of employee benefits to overall costs down to 46 percent.
Other costs efficiencies were achieved through a reduction in marketing and communication budgets along with system expenses.
NSE’s total revenues however declined by a marginal 1.2 percent as a slide in the turnover of the bonds market offset gains in equities transactions.
Bonds turnovers retreated by 18.3 percent to Ksh.359 billion while equity transactions grew by 6.5 per cent to Ksh.83 billion.
In spite of heavy investor selloffs which saw the NSE 20 and all share index decline by 26 and eight percent respectively, NSE Chief Executive Officer Geoffrey Odundo says local investor capacities shored up the performance.
“Despite the fact we had negative flows from international markets, on a positive note, large pension institutional investors and even retail investors’ acquired stocks,” he said.
The combination of cost cutting initiatives and resilience in operations saw the company improve its cash generation to Ksh.70.6 million from Ksh.28.3 million last year as its cost to income ratio improved to 65 per cent from 91 percent in the same period.
The board of NSE did not declare an interim dividend as it remains cautious of the volatile operating environment.
The company is however optimistic of a second half of the year rebound in the operating environment as the COVID-19 pandemic is brought under control.
“We would expect to see a resilient performance with a strong indication of a recovery. We expect new primary bond issuances to for instance improve participation in our secondary market for government securities,” added Odundo.
The NSE is betting on its new 2020-2024 strategy to deliver growth into the medium term.
The strategy is focused on among other pillars, an aggressive listings strategy, the diversification of revenues through data investments and the enhancing of local retail investors.
The plan is expected to be stewarded by the new Board Chairman Kiprono Kittony who took over ranks on Wednesday.