Housing Finance Ltd. (HFCL), Kenya’s only publicly traded mortgage lender, climbed to the highest level in almost 16 months as AIB Capital Ltd. started coverage on the stock with a buy recommendation.
The shares advanced 3.9 percent to 17.50 shillings by 1:19 p.m. in Nairobi, the highest intraday price since Sept. 22, 2011. About 144,000 shares, or 122 percent of the three-month daily average volume, changed hands, according to data compiled by Bloomberg.
Lower interest rates in Kenya will help Housing Finance increase lending and boost income, according to AIB. The Central Bank of Kenya’s Monetary Policy Committee, led by central bank Governor Njuguna Ndung’u, reduced the rate for the fourth time since July last week, cutting it to 9.5 percent from 11 percent.
“We have been seeing that investors are taking early positions in financial companies ahead of announcement of earnings,” Ted Macharia, a research analyst at Nairobi-based AIB Capital, said by phone today. AIB has a price target of 21 shillings a share.
Housing Finance’s net income in the nine months to Sept. 30 slipped to 396 million shillings ($4.57 million) from 407 million shillings a year earlier, it said Oct. 29. The company reported a 26 percent increase in non-performing loans, which it attributed to higher interest rates, saying the situation was improving as rates were reduced.
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