Bank shares on a bull run at Dar bourse

The banking sector stocks on the Dar es Salaam Stock Exchange (DSE) have experienced the bull market since the beginning of this year, with CRDB bank shares rallying to four-year high.

Financial experts attribute the market’s bullish trend that has also seen the National Microfinance Bank (NMB) shares reaching the all time high to investors’ beliefs that the positive trend will persist for long term. 

And, since the stock market serves as a gauge of the listed companies’ performance, the bourse offers strong positive indicators for the country’s economy.

The Banking segment Index settled for 1,634.07 points up by 1.74 per cent stronger at the end of last week, pushing north both DSE all Share Index (DSEI) and Tanzania Share Index (TSI) to all time high. 

DSEI gained by 4.52 per cent to reach 1,552.83 points from 1,485.63 points of January, while TSI shoved by 19.86 per cent to settle at 1,714.61 points against 1,430.46 points of five months ago.

The Tanzania Securities report shows that NMB shares rallied to all time high level by appreciating 41.07 per cent to 1,580/- and CRDB stocks went up by 46.42 per cent to 205/-, the four-year high. 

The DCB bank counter however registered disappointing results during the period under review as its shares depreciated by 17.74 per cent to close the first five month period at 510/- from 620/- in January.

Zan Securities Chief Executive Officer Raphael Masumbuko said the DCB share prices were bound to drop following the right issue and bonus share that reduced the price. 

“Whoever is selling DCB share at the current price is still making profit…the price will stabilize in a near future,” Mr Masumbuko said, noting that even if investors sold their shares at 500/-, they could still gain.

The banking sector, in the first quarter of this year posted impressive financial results, an indicator that the sub-sector had managed to sail through tough waters. 

Experts say the outlook of banks and financial institutions remains positive for this year after experiencing rough and tough period in 2012, when the costs of fund jumped to between 17 and 20 per cent amid double digit inflation rate.

The Dhow Financial Chief Executive Officer, Prof. Mohamed Warsame, told the Business Standard in an interview that the situation had improved significantly in the first three months of this year and as a result most banks and financial institutions have posted profits.

“I think this is going to be a good year for the banks, as last year was real difficult. Overall, the banks are back on track as costs have gone down,” said Prof. Warsame. 

He said last year about 30 per cent of banks either made losses or their profits slowed down as they had to squeeze their activities to avoid passing over costs to borrowers.

From financial results for the first quarter published, National Microfinance Bank (NMB) pre-tax profit rose to 42.61bn/- from 34.79bn/- of the same quarter in 2012.

Barclays Bank posted a net profit increase to 1.075bn/-, up from 442m/- while the People’s Bank of Zanzibar posted a profit increment of 1.47bn/- compared to 438m/- of 2012. 

Other banks—like Standard Chartered—saw their net profits slowing down to 7.73bn/- against 9.89bn/- it posted in the same quarter 2012 and Kilimanjaro Co-operative Bank posted a loss of 95.95m/- compared to a profit of 23.52m/-.
Source: The Daily News, reported from Dar es Salaam
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