Kenya Commercial Bank Ltd., the biggest lender by assets and outlets in the East African nation, jumped to the highest in more than four years as investors were attracted by a lower price-to-earnings ratio than its peers.
The stock of KCB, as the lender is known, rose 0.9 percent to 28.25 shillings by the close in the capital, Nairobi, the highest level since August 2008.
“For the price earnings ratio, it still has more value compared to its peers,” Faith Atiti, an analyst at Nairobi-based NIC Securities Ltd., said in a phone interview today.
Among Kenya’s four biggest lenders by market value, KCB has the lowest price to earnings ratio at 7.59, according to data compiled by Bloomberg. Equity Bank Ltd., the biggest lender, has a ratio of 7.92, Barclays Bank of Kenya’s is 9.52 and Standard Chartered Bank Ltd.’s is the highest at 10.98.
“We have seen a lot of appetite for the stock from foreign investors, because the price looks attractive on a price to earnings ratio,” Francis Mwangi, head of research at Nairobi-based Standard Investment Bank Ltd. said in a phone interview.
The average price to earnings ratio for Kenya’s banking industry is 8.2, based on earnings in the 12 months through to December 2011, Mwangi said.