The Nairobi Securities Exchange (NSE) has announced that its 2016 profit is likely to decline by more than 25 per cent compared to last year.
In a profit warning announcement, the bourse attributed this to a decline in equity market share prices. Trading revenue accounts for 53 percent of the company’s revenues stream.
However, Chief Executive Officer Geoffrey Odundo said that despite numerous challenges, both locally and internationaly, the market has continued to be resilient, resulting in an increase in the volume of traded units compared to the same period last year.
“Over the course of 2016, the Kenyan economy and particularly the Capital Markets sector has remained resilient despite a challenging operating environment both locally and internationally. The market has recorded increased volume of traded units for the period ended 30 September 2016 as compared to the same period last year,” he said.
There continues to be significant interest from foreigners in the market, with increased trading activity particularly from large institutional investors,” Odundo added.
Here is the statement:
Last year, the NSE realised an overall marginal decrease of Sh13.6 million (1.7 per cent) in total income of Sh808.3 million compared to Sh821.9 million the previous year.
Profit after tax stood at Sh305.6 million, a 4.5 per cent decrease in net earnings of Sh320 million recorded in 2014.
Equity turnover dropped by 3 per cent to Sh419 billion from Sh431 billion and fixed income market performance declined by 39.7 per cent from Sh1 trillion in 2014 to Sh610 billion in 2015.
Speaking during the results announcement in March, Odundo attributed the decline to the introduction of the Capital Gains Tax (CGT) that had a negative effect on trading activity as well as the rise in interest rates and volatility of the currency that also impeded market performance.
The NSE had hoped introduction of new products would lead to better performance in 2016.