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Kenya central bank holds rate, says exchange rate steady

Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s central bank held its benchmark lending rate at 11.50 percent, saying the exchange rate had stabilised and the current account deficit had narrowed, the bank’s Monetary Policy Committee (MPC) said on Tuesday.

The decision was in line with a Reuters poll of 10 analysts in which eight had expected no change in the rate.

The bank raised the lending rate by 300 basis points earlier this year in part to support the weakening shilling.

As well as noting that the shilling had stabilised, the committee said in a statement that lower oil prices and a slowdown in consumer demand had helped narrow the currency account deficit. The trade gap has put pressure on the currency.

“The committee concluded that the monetary policy measures in place are appropriate to maintain market stability and anchor inflation expectations,” the committee said.

 

(Reporting by Duncan Miriri; Editing by Edmund Blair, Reuters)

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Kenya’s Housing Finance Jan-Sept pretax profit up 7%

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kenya housing finance

NAIROBI (Reuters) – Kenyan mortgage lender Housing Finance Group posted a 7 percent rise in nine-month pretax profit on Tuesday, helped by growth in net interest income.

Pretax profit rose to 1.1 billion shillings ($10.8 million)for the nine months to Sept. 30. Net interest income rose 24 percent to 2.72 billion shillings, it said in a statement.

Housing Finance said net loans and advances to customers rose to 51.71 billion shillings from 43.27 billion shillings, with net non-performing loans falling by a fifth to 2.7 billion shillings.

Housing Finance’s earnings per share fell to 2.98 shillings from 4.15 shillings in the same period last year. It declared a dividend per share of 0.65 shillings, down from 0.75 shillings.

It did not give a reason for the fall in earnings per share, but it conducted a rights issue in March in which it offered 116.67 million new shares, raising 2.95 billion shillings.

(Reporting by George Obulutsa; Editing by Anand Basu, Reuters)

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Kenya’s Equity Bank Group says Jan-Sept pretax profit up 14%

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NAIROBI (Reuters) – Kenya’s Equity Bank Group posted on Monday a 14 percent rise in pretax profit for the first nine months of the year to 18.14 billion shillings ($177.58 million), helped by higher interest income.

Equity, which focuses on the lower-income part of the Kenyan market and also operates in Uganda, South Sudan, Tanzania, Rwanda and Democratic Republic of Congo, said interest income rose 21 percent to 31.60 billion shillings, while customer deposits rose 30 percent to 317 billion shillings.

Equity group’s ratio of bad debts to total loans rose to 4.5 percent from 4.3 percent in the first nine months of 2014, James Mwangi, its chief executive officer told an investor briefing.

Its total loan portfolio rose by 27 percent to 263.4 billion shillings from 206.7 billion shillings, while total assets rose to 445.8 billion shillings from 339.44 billion shillings.

In May, Equity Bank – which wants to increase operations to 10 more African nations by 2024 – bought a 79 percent stake in ProCredit Bank Congo, the seventh biggest lender in the Democratic Republic of Congo.

Equity Bank launched its own mobile phone service – known as Equitel – in July and has 1.3 million users.

Mobile banking is seen as the future of the sector, with more people accessing financial services on their phones and other portable devices, spurring lenders to partner with telecom firms to offer services.

 

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Value of coffee sold at Kenyan auction falls 18% in 2014/15

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NAIROBI (Reuters) – The value of coffee sold at Kenya’s auctions fell 18 percent to $142.5 million in the crop year to September, hit by lower volumes, the head of the Nairobi Coffee Exchange (NCE) said on Monday.

The east African nation, whose high-quality beans are sought by roasters to blend with beans from other producers, exports much of its coffee through the exchange and the rest is sold by growers directly to foreign buyers.

The NCE sold coffee worth $174.1 million in the 2013/14 season that runs between October and September.

“Drought conditions early in the year affected crop especially in the central Kenya growing areas and that has reflected in the overall performance,” Daniel Mbithi, the chief executive of the NCE told Reuters.

Officials said 568,766 60-kg bags were sold during the period, down from 671,438 the previous year. The average price at the exchange also dropped to $205.02 per 50-kg bag from $212.70 the previous year.

East African coffee is normally packed in 60-kg bags, but the prices are quoted for quantities of 50 kg.

Coffee exports were at one time Kenya’s leading foreign exchange earner but have slipped to under 50,000 tonnes in recent years from a record level of 130,000 tonnes in 1987/88.

Many smallholder coffee farmers, disillusioned with poor earnings, switched to other crops or sold land for real estate in recent years.

The area of coffee plantations in Kenya has fallen to 109,000 hectares from the average of 150,000 hectares in 1980s and 1990s, the regulator, the Coffee Directorate, has said.

 

(Editing by Duncan Miriri and Mark Potter, Reuters)

 

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Kenyan shilling strengthens ahead of bond auction

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NAIROBI (Reuters) – The Kenyan shilling strengthened on Monday, with the local currency supported by dollar inflows to be used for purchase of Kenya’s high-yielding government debt.

At 0715 GMT, commercial banks posted the shilling at 102.25/35 to the dollar, from Friday’s close of 102.40/102.50.

The currency, down about 14 percent against the dollar this year, was receiving support from inflows ahead of an Oct. 21 auction of an amortized one-year Treasury bond, and more broadly from its weekly Treasury bills auctions, said a trader at one Nairobi-based commercial bank.

“We have seen dollar inflows from foreign buyers coming in for the bond,” the trader said. “And, later in the week, as long as the T-bills continue to be this high, the shilling will continue to gain.”

In recent weeks traders have reported growing dollar inflows from foreign investors who have been attracted by interest rates on government Treasury bills of more than 20 percent, far above what Kenya usually pays for short-term debt.

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Safaricom bags lion’s share of Kenyan mobile revenues

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NAIROBI (Reuters) – Safaricom dominates the Kenyan mobile market, sweeping up more than 90 percent of revenues in areas such as voice calls and text messaging, according to regulator data that could further fuel a debate about competition in the industry.

Rivals like Bharti Airtel and some officials have complained that Safaricom’s dominance stifles competition. France’s Orange is seeking to sell its Kenya operation, becoming the second international operator to quit the country after India’s Essar Telecoms sold its Yu business last year.

The data obtained by Reuters comes as the East African nation is amending the telecom sector’s competition law to give the regulator more powers to penalise companies deemed to be abusing dominant positions in the industry, though what would constitute such abuse is as yet unclear.

Safaricom, in which Britain’s Vodafone has a 40-percent stake, has dismissed accusations it hampers competition, saying it does not abuse its dominance.

Safaricom’s revenues from calls amounted to a 91.63 percent market share in 2014, while its closest competitor, Airtel, had 8.33 percent, according to the data obtained from the Communications Authority of Kenya (CAK).

In text or short messaging services, Safaricom had more than a 90-percent share of total market revenues from that segment, the regulator said.

In mobile data, or internet services, Safaricom’s revenues were 85.50 percent of the market share in 2014, while Airtel had 14.43 percent, Orange had 0.01 percent and Equitel, operated by Equity Bank’s subsidiary Finserve, 0.06 percent.

The figures for Orange are for 2013 as it had not submitted audited accounts for 2014 to the regulator, CAK said.

The regulator usually issues quarterly figures for number of subscribers, which give Safaricom a 67 percent share of Kenya’s 35 million users in June. It also gives traffic volumes for areas such as calls.

Asked about the regulator’s revenue breakdown, Safaricom Chief Executive Bob Collymore told Reuters: “We don’t recognise that data.” He said subscriber numbers and network traffic were a better gauge of how the firm was performing.

 

M-PESA

The data did not detail revenue from phone financial services, where Safaricom’s M-Pesa service is the most popular offering, allowing users to pay bills or send money even using the most simple mobile phone device.

Analysts say this service draws customers to use Safaricom’s wider telecoms services over its rivals.

Eric Musau, analyst at Standard Investment Bank, said the dominance of a single operator was hurting competition by driving out rivals like Essar and Orange.

He said, however, that some smaller operators were failing due to inadequate capital, frequent shareholding changes and a lack of a sound strategy for the local market. “I would say one player had a better strategy than the rest,” he added.

CAK said in August that it was amending the telecom sector’s competition law, but said it was not targeting Safaricom or any other company. It did not aim to penalise any company just for being dominant, but only if there was abuse of its position in the market.

The regulator’s head, Francis Wangusi, said at the time the new regulations would break down the telecoms sectors into segments including mobile and fixed voice, data, text messaging and mobile money transfer services.

“It is too early for us to come up to say ‘Safaricom you are dominant’, because Safaricom can be dominant in certain markets, but not dominant in others,” he said. “In all these markets, we would not apply the same rules,” he added.

Safaricom has opposed the proposed changes saying they could deter investments by targeting large firms.

Airtel Kenya CEO Adil El Youseffi said the current market situation was limiting innovation and consumer choice and driving operators out of the country. “The sector is unable to attract new or incremental investments from other international players,” he told Reuters.

Orange Kenya gave no specific comment on the figures.

(By Duncan Miriri, Reuters)

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Kenya’s KenGen says full-year pretax profit more than doubles

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NAIROBI (Reuters) – Kenya’s main electricity generator KenGen said on Monday its pretax profit for the full year to June rose 109 percent to 8.69 billion shillings ($84 million), helped by higher electricity sales.

KenGen, which is 70 percent state-owned, said in a statement its performance was boosted by increased generation from geothermal and wind power.

“Profit before tax increased … propelled by capacity growth, improved performance and tax credit from capital allowances enjoyed by the company following the commissioning of 280 MW geothermal plants, well heads and Ngong Wind,” it said.

It said electricity revenue jumped to 25.6 billion shillings from 17.4 billion the year before.

Earnings per share rose to 5.24 shillings from 1.29 shillings during the year to June 2014 and it said it would pay a dividend of 0.65 shillings per share, up from 0.40 shillings previously.

Operating costs rose to 8.41 billion shillings from 7.02 billion due to operating and maintaining new plants.

KenGen said in July it planned to add another 450 megawatts (MW) to the grid from wind and geothermal in the next three years at a cost of at least $710 million. [ID:nL8N0ZN29V]

Kenya, which depends heavily on renewables such as geothermal and hydro power, aims to expand installed capacity to about 6,700 MW by 2017, from about 2,500 MW now. It also aims to halve bills from between $0.17 and $0.18 per kWh within three to four years.

 

(Reporting by George Obulutsa; Editing by David Holmes, Reuters)

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Orange in final talks to sell Kenyan mobile stake

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NAIROBI (Reuters) – France’s Orange SA is in the final round of negotiations with an unidentified party to sell its 70 percent stake in Orange Kenya, Kenya’s finance minister said.

Orange is the latest international operator to quit Kenya, where Safaricom, part owned by Vodafone, has 67 percent of Kenya’s 36 million mobile users.

“(Orange) wants to exit so they are selling their 70 percent,” Finance Minister Henry Rotich, who oversees the government’s 30 percent shareholding in Orange Kenya, told Reuters. “They are in final negotiations.”

Without naming the other party, Rotich said he expected the transaction to be completed “very soon”, adding that it could be completed before the end of year.

Orange paid $390 million for its stake in 2007, aiming to capitalise on what were fast growth rates in the sector. Its plan was to make the firm, then known as Telkom Kenya, profitable and then to take it public in five years.

Orange was not immediately available for a comment.

Faith Mwangi, a research analyst at Standard Investment Bank, said Orange Kenya has struggled in recent years despite enjoying a monopoly in fixed-line telephones.

“They essentially failed to innovate,” she said, adding Orange’s strategy of offering cheaper calls had helped it claw back some market share in recent years.

Orange increased its users to 4.0 million in the quarter ended June from 3.7 million in the previous quarter, industry regulator Communications Authority of Kenya said.

“They have been consistently gaining market share,” Mwangi said.

One of Safaricom’s main advantages has been the development of its pioneering M-Pesa mobile money system, which allows users of even the most basic mobile phones to make payments. Rival offerings have yet to break Safaricom’s dominance.

Kenya has two other telecom operators, India’s Bharti Airtel and Finserve, which is owned by one of the country’s biggest banks’ Equity. India’s Essar Telecoms sold its Kenyan business, Yu, last year after it failed to make it profitable.

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