Kenyan multimillionaire and former Capital Markets Authority Chairman James Ndegwa has suffered a loss of Ksh199.47 million ($1.80 million) in the past 20 days from his stake in the Kenya-based financial services conglomerate, NCBA Group.
The loss came off the back of profit-taking actions and portfolio-rotation activities on the Nairobi Stock Exchange, as investors opted for shares with impressive upside potential after the U.S. credit rating agency Fitch Ratings assigned the group’s default and viability ratings a negative outlook.
As of press time, Oct. 12, shares in the Kenya-based financial services conglomerate were trading at Ksh25.05 ($0.2261), 79-basis points lower than its opening price of Ksh25.25 ($0.2279) this morning.
Since the Fitch rating was assigned, the group’s shares have lost more than 10 percent of their value, with stock prices falling from Ksh28 ($0.2527) on Sept. 23 to Ksh25.05 ($0.2261) at the time of writing.
Meanwhile, the market value of Ndegwa’s four-percent equity stake in NCBA group has declined from a valuation of Ksh1.89 billion ($17.09 million) on Sept. 24 to Ksh1.69 billion ($15.29 million) on Oct. 12.
This translates to a loss of Ksh199.47 million ($1.80 million) for the multimillionaire in 20 days.
NCBA Group is a Nairobi-based financial services conglomerate with operations in East and West Africa.
The leading financial services provider functions as a non-operating holding through the active operations of its wide network of subsidiaries in Tanzania, Rwanda, Uganda and Cote d’Ivoire.
In the first half of 2021, the group reported a 77-percent growth in its profit from KSh2.8 billion ($25.9 million) in the first half of 2020 to N5.1 billion ($46.0 million), as its total interest income for the period more than doubled.
During the half-year period, its impaired loan ratio rose to 16.2 percent from 11.5 percent in the corresponding period of 2020.
Analysts anticipate the further deterioration of up to about 20 percent in its impaired loan ratio, with the pace of the new impaired loan generation stabilizing by 2022 in line with operating conditions.
The Nairobi-based financial services conglomerate is expected to remain profitable in 2021, but its performance may be pressured by higher loan impairment charges if asset quality continues to weaken.