Investors jostle for appreciating bank shares

Local and international equity investors are scrambling for bank stocks, thanks to their good performances that have pushed up share prices to all time high.

Stock market analysts said in Dar es Salaam that the banking sector was performing well, especially after the global financial crisis. The bank shares are also reported to be sold at discount rates compared to the market rates, attracting long-term investors who scramble for the equities.

Orbit Securities Head of Dealings and Operations Juventus Simon said the bank stocks at Dar es Salaam Stock Exchange (DSE) were relatively cheap compared to similar size banks listed on the Nairobi Stock Exchange. “CRDB and NMB (National Microfinance Bank) are not only cheap but also have strong balance sheets, thus attracting investors,” Mr Simon said, adding:

“Actual demand has exceeded supply.” Weekly report by Tanzania Securities indicates that the banking segment Index gained by 2.32 per cent to close at 2,084.77 points last week, buoyed by gains made on the DCB Bank and NMB counters.

The gain in the banking sector pushed up the DSE all Share Index (DSEI) by 0.22 per cent to settle at 1,611.15 at the end of last Friday while Tanzania Share Index (TSI) closed at 1,961.23 after surging by 0.77 per cent.

“Both Indices (DSEI and TSI) strengthened with the banking segment index gaining,” Tanzania Securities Analyst Brenda Massy said in the report. 

Zan Securities Chief Executive Officer, Raphael Masumbuko said that the banking sector is attracting investors because of its expansion drive, currently undertaken by many financial institutions.

“Investors have pegged a good hope on return on equities to push up demand,” Mr Masumbuko told the 'Daily News' yesterday, adding:

“The three banks (CRDB, NMB and DCB) made good profits last year and in the first quarter of this year, pushing up their assets.” Stock analysts said they could not predict the positive movements in prices of the banking stocks, especially CRDB, as they are still trying to find their market equilibrium rate.

“It is not easy to give a realistic price levels until we analyse the second quarter’s results that will map out clear pictures,” Mr Masumbuko said.

According to Tanzania Securities’ price movement analysis, CRDB shares have appreciated by 128.14 per cent to trade at 320/- a share while NMB has gone up by 57.14 per cent to 1,760/- each between January and last week. But, the DCB share price dropped by 23.38 per cent to 475/- in the last seven months.

In the recently weeks, however, the community turn-commercial bank saw its shares making an abruptly U-turn and starting to rise. “The bank has done right-issues and we expect to see the results of the issue in the next one to two years, if the intended expansion goes well,” Mr Simon said.
Source: Daily News, reported by Abduel Elinaza from  Dar es Salaam, Tanzania
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