Why investors are rushing for bank stocks

Monday November 22 2021
Stock pic
By Josephine Christopher

Dar es Salaam. Investor appetite for NMB Bank Plc and CRDB Bank Plc stocks remained high during the past few weeks as they seek to cash in on the lenders’ mouthwatering financial results.

The two largest banks registered double-digit growths in their profit levels during the third quarter of the current calendar year.

The NMB Bank’s net profit rose by 43 percent, to reach Sh208 billion, during the first nine months of the current calendar year - as did CRDB Bank’s net profit, which rose by 39.2 percent to reach Sh162.68 billion during the same period.

Although more than five weeks have elapsed since the announcements were made, the results seem to still dictate investors’ decisions at the Dar es Salaam Stock Exchange (DSE).

Stocks for the two lenders have been top market movers at the DSE for the past two weeks, contributing over 80 percent of the market turnover for the traded shares.

Last week, a total turnover of Sh1.8 billion was realised at the DSE.

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NMB was the top market mover - accounting for 82.73 percent of the rise - while CRDB’s counter was second, contributing 11.57 percent, according to data by brokerage firm Vertex International Securities Ltd.

In the preceding week that ended on November 12, 2021, the two banks captured 84.29 percent, with the CRDB Bank accounting for 84.29 percent while NMB Bank chalked up 11.79 percent of the week’s Sh2.63 billion turnover.

“To a large extent, these positive activities from the counters were influenced by the good results that they both posted during the third quarter of the current calendar year,” said Vertex’s capital markets manager, Mr Ahmed Nganya.

He added that the increasing participation of the local investors also played a great role in the market performance.

Although the local participation was slow last week, in the preceding week, locals traded over 90 percent of the stocks in the market.

“There is also a good momentum at the NMB counter which, we expect, will continue next week - and, thus, boost the market performance even more,” said Mr Nganya.

NMB’s stock price gained by 8.51 percent, to close at Sh2,040 a share while CRDB stocks closed the week at Sh240 per share.

“We expect an increase in turnover as we anticipate more foreign buyers,” said Mr Nganya.

Moreover - according to Vertex - Total Market Capitalisation increased to Sh15.61 trillion last week, while the Domestic Market Capitalisation increased to Sh9.3 trillion: a 0.57 percent increase.

Key performance indicators closed in green, with the All Shares Index (DSEI) gaining 0.01 percent to close at 1,873.44 points. The Tanzania Shares Index (TSI) increased by 0.57 percent, closing at 3,517.84 points.