SBG profit rises 140pc on mega deals

SBG Securities has posted 139 percent growth in profit to Sh77 million for the financial year ended December 2018 on the back of a busy deals pipeline, defying last year’s bear run at Nairobi bourse.

The investment adviser and market maker at Nairobi Securities Exchange (NSE) grew brokerage commission by three per cent to Sh260 million while advisory fees more than tripled to Sh32.5 million.

This helped push revenues to Sh353 million, being 15 per cent higher than Sh307 million generated in the previous year.

Executive director Bethuel Karanja said the firm, a subsidiary of Stanbic Holdings Plc, closed some key deals in investment banking business, sheltering it from relatively stagnant brokerage business.

“Trading activities remained fairly stable but we had a good growth in total income mainly driven by advisory fees and efficient investment of the excess cash that we had in our books,” he said.

Last year, NSE turnover, a key determinant of brokerage fees, rose by two per cent year-on-year as the market slipped into a bearish run. Foreign investors turned net sellers to take advantage of higher returns outside emerging markets.

“The market was down and we had many offshore investors selling. As brokers, we still made commission from this activity. But overall volumes remained flat and therefore limited our fees,” said Mr Karanja.

During the period, SBG cut expenses by eight per cent to Sh238.7 million, further helping it grow the bottom-line.

Its share in equities trading market share rose from 16.38 per cent to 16.41 per cent.

But overall, it was ranked third in equities market share compared to the second position held in the previous year.

SBG joined Stanbic Bank Kenya #ticker:CFC, Stanbic bank South Sudan, SBG Securities and Stanbic Insurance Agency in posting increased revenues that saw net profit of Stanbic Holdings rise 46 per cent to Sh6.3 billion.

The investment bank has been on recovery, having bounced back from a loss of Sh7 million in 2016.

Over the last three years, return on equity has improved from negative eight per cent in 2016 to 24 per cent in 2018.

This year, the firm’s priority is to maintain differentiated products and services.