Impressive performance to push up bank share prices

Share prices of listed banks are projected to rally further following impressive performance of many commercial banks in this year’s first half.

The shares of the two most profitable banks—National Microfinance Bank and CRDB Bank—have already increased. 

But, a financial analyst said price prediction is difficult because stock markets “are strange animals” for a company can be performing well operationally but trade poorly on the stock market.

Zan Securities Chief Executive Officer Raphael Masumbuko said a recent trend shows that most investors were return and not dividend focused, a situation that has pushed up demand amid limited supply. 

“The era of investors buying to cash on dividends is slowly disappearing and earning per shares focus is emerging,” Mr Masumbuko said.

Dhow Financial Managing Director Prof Mohamed Warsame described stocks as strange animals, saying share price predictions were difficult. 

“Pointing the price direction is too speculative,” Prof Warsame told the ‘Daily News’ in Dar es Salaam, “better talk about the banks performances which in the (second quarter) were great.”

However, both stockbrokers and financial analysts said the two giant banks—NMB and CRDB—performed well and would attract other banks to consider listing at the bourse. 

Professor Warsame said previously when CRDB bank shares traded poorly on the bourse, other banks were skeptical to list but the situation has improved overtime.

He said more banks will in the near future seek to list on the Dar es Salaam Stock Exchange to raise capital as their understanding of the bourse operations increases.

“We expect more small banks in particular to approach the market to raise capital,” Prof Warsame said. 

Since the beginning of this year, CRDB and NMB shares have rallied to all time high after appreciating by 128.57 per cent to 320/- and 58.93 per cent to 1,780/-, respectively.

Week -on-week turnover, ending last Friday, increased by 624 per cent to 3.51bn/- while shares traded rose to 10,812,170 shares (or 816.27 per cent) from last week’s 1,180,106 shares, with CRDB counter accounting for 98 per cent of the total turnover.

“We foresee a moderate to high activities in the coming week as we expect more activities on the banks counters and some counters under manufacturing segment,” Tanzania Securities Business Analyst, Brenda Rose Massay, said in a weekly report.

NMB posted a net profit of 33.14bn/- in three months ending June this year, while CRDB came second, generating a net profit of 20.09bn/-, leaving a difference of over 10bn/-.
Source: Daily News, reported by Abduel Elinaza from Dar es Salaam, Tanzania

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