NSE FY’2016 Results: Core earnings per share declined by 39.8% to Ksh.0.7 from Ksh.1.2
NSE FY’2016 Results have been released, posting a 39.8 percent decline in core earnings per share to Ksh.0.7 from Ksh.1.2. This was driven by a 20.6 percent decline in operating revenue to Ksh.527.2 million from Ksh.663.9 million in FY’2015, coupled with a higher growth in operating expenses by 8.7 percent to Ksh.487.3 million from Ksh.448.3 million in FY’2015.
Key points to note include:
- Operating revenue declined by 20.6 percent to Ksh.527.2 million from Ksh.663.9 million in FY’2015. This was driven by a 30 percent decrease in equity turnover to Ksh.294 billion in 2016 from Ksh.419 billion in 2015, despite an increase in fixed income turnover that increased 39.4 percent to Ksh.428.3 billion from Ksh.307.2 billion in FY’2015.
- Interest income declined by 6.2 percent to Ksh.94.8 million from Ksh.101 million, mainly attributed to prevailing lower interest rates on deposits held in the year compared to 2015. Other income increased by 119.8 percent to Ksh.95.3 million from 43.3 million mainly driven by a gain of Ksh.27 million from the sale of investment in shares and higher market access fees on the admission of a new member.
- Operating expenses increased by 8.7 percent to Ksh.487.3 million from Ksh.448.3 million in FY’2015. This was despite the cost management measures undertaken. As a result, the cost to income ratio worsened to 67.9 percent in 2016 compared to 55.5 percent in 2015.
- Profit after tax declined 39.8 percent to Ksh.184 million from Ksh.305.6 million in FY’2015.
- Total assets increased by 5 percent to Ksh.2 billion from Ksh.1.9 billion with current assets increasing by 7.8 percent to Ksh.1 billion from Ksh.927.4 million, while non-current assets increased by 1.4 percent to Ksh.1 billion from Ksh.990.8 million.
- Total Liabilities increased by 5 percent to Ksh.150.6 million from Ksh.143.5 million, as shareholders’ funds increased by 5 percent to Ksh.1.9 billion from Ksh.1.8 billion.
- The management recommended a decreased dividend payment by 44.9 percent to Ksh.0.3 per share from Ksh.0.5 per share in FY’2015. This translated to a dividend yield of 2.5 percent.
Going forward, we expect growth to be driven by:
- Continuous product innovation & offerings, and technology enhancements such as the just launched trading of Exchange Traded Funds (ETFs)
- Enhanced regulation towards increasing liquidity which has seen the introduction of a market making framework and securities lending and borrowing legislations.
However, a major challenge they may face going forward is reduced equity trading on the bourse due to tougher market conditions.