Housing Finance- BUY, Target price Kes 45.39
The group’s profit before tax was at Ksh 1.4 billion in 2014, similar to results announced in 2013 weighed down by heavy investment in building human resource to support the banking strategy; investment in the core banking system and the branch expansion. Net loans and
advances grew 28% to Ksh 45 billion from Ksh Ksh 35 billion in 2013

KBS is expected to further boost earnings in the current financial year with the completion of Precious gardens phase one; Kahawa Downs , Komarock phase 2 and K Mall to be completed in 2015

The Company raised Ksh 3.5 billion during the rights issue to fund the growth and expansion plans. The expansion of housing finance branch network is also expected to provide increased opportunities for
mobilizing lower costs deposits to finance growth.

We expect good growth in earnings in the current financial year as contributions from the subsidiaries are expected to increase significantly.

COOP BANK- BUY
The group reported a profit before tax of Ksh 10.92 billion same level of profitability as in the previous year after removing a one off staff retrenchment cost of Ksh 1.34 billion. The bank expects to save at least Ksh 500 million annually out of this rationalization.

Profit after tax was Ksh 8 billion compared to Ksh 9.1 billion previous year on account of a higher tax bracket of 30% from 20% the previous year. Asset book rose 31% Interest income 20% and non funded income 17%.

The bank engaged Mc Kinsey and company to undertake “growth and efficiency review”. We expect a reduction in operating expenses as a result of the costs
cutting measures employed. Management estimates a reduction in the cost to income ratio to 53% in 2015 and below 50% by 2017, 30% reduction of cost of funds
by 2015, growth of atleast 30% in 2015. We expect improved profitability in 2015.

Expected to announce the first quarter results end of this month.

NIC BANK- BUY, target price 77
In its 2014 results, Net interest income rose 10% to Ksh 8 billion, Non interest income was up 11% to 3.6 bn, Loans and advances were up 22% to 102 billion and Profit after tax rose 27% to Ksh 4.1 billion.

The Company plans to increase its country wide presence by opening more branches as well as focus on regional expansion. We therefore expect increased revenues from the loan book growth and from new business.

The Company recently opened a new leasing subsidiary, NIC Leasing Limited Liability Partnership, in a bid to tap into the the growing leasing market. It has partnered with Mercantile Finance which it too fully owned and is a subsidiary to the Bank.

The company is currently trading at a P/E of X8.06 against the sector average of X10.40, with an EPS of Ksh 7.07.

CIC Insurance- BUY at Kshs 9

The group reported a drop 16.5% drop in Profit after tax in 2014 to Ksh 1 billion from Ksh 1.3 billion in 2013 due to increases in claims particularly on the medical business. Assets increased 39% to Ksh 23.7
billion

The company has hired financial consultancy firm Deloitte to advise on the restructuring of the Company after its 2014 performance. The move is aimed at cutting costs and boosting the insurers efficiency.

CIC is the leading provider of micro insurance in the region, capitalizing on strategic partnerships with banks, Sacco’s and monetary financial Institutions with alternative distribution channels such as Bancassurance and agency banking to increase micro-insurance on penetration with products more tailored to the low income population. Regional expansion and real estate projects also expected to boost its revenues.

We hold a Long-term positive view on the counter based on the vast potential for micro insurance in Kenya and the regional economies.