Equity Bank’s share reached a 38-month high yesterday beating East Africa Breweries Limited (EABL) to become the second most valued company at the Nairobi Securities Exchange (NSE).
Equity’s stock closed trading at Sh56, an increase from Sh54.50 on Monday, boosting its market value to Sh211.3 billion at the NSE. The share is trading at the highest price since 25 February 2015 and has added Sh31 billion to owners in the past month.
According to analysts, the increase in Equity Bank’s share is because of its performance and dividends payout as bank stocks continue to reap the benefits of the plans to review the interest rate cap law which has been affecting the banks’ profits.
“The upward trend for banks is generally driven by the talk by the Treasury of repealing the interest rate cap,” Eric Munywoki Genghis Capital research analyst said.
“For Equity Bank, if you look at their performance for 2017, it was one of the best performers which recorded positive growth and there’s also the aspect of dividend payout. So there are investors holding their positions because of dividend payout.”
Equity Bank paid a dividend of Sh2 per share.
The bank’s share increased the most among the top NSE-listed banks, gaining 36.5 percent in the past three months. Barclays bank gained 32.8 percent in the same duration followed by KCB at 25.3 percent, Co-operative Bank at 20.4 percent, and Standard Chartered at 11.9 percent.
Equity Bank was able to reduce the effect of the interest rate cap law by reporting fewer loan defaulters, more earnings from processing loans and lower employees cost thereby recording a higher profit than its rivals.
The plans to review the law have positively affected banking stocks.
Safaricom has the highest market value of Sh1.27 trillion.