Banks profitability started the slid in Q3 2012 qoq. Expect the effects of the high interest rates to lag into the next 1yr. For now its best to take some profits in the bank stocks. The very conservative lenders like SCB, DTB and BBK will be an exception to the rule.

For my 2013 portfolio,my focus is on the following:
-HFCK:- assuming they are making good use of the money they have raised via debts and a bond,a fall in lending rates will see a rise in mortgage lending.It has a high dividend yield at prevailing prices and has oscillated at ksh15-ksh 16 for too long.It may break out.
-Rea Vipingo:-With an eps >7 last year,this year i project one greater than ksh 8,it also trades at a nice dividend yield price.
-Mumias:- the stock is trading at a fraction of its price to book.It has a high dividend yield too. With some factories which compete for cane having closed down periodically,mumias has the advantage.Safeguards due to expire in 2014 and a possible rights issue.It is a buy in 2013 but sell every share before these events.
-Williamson Tea:- Fundamentals remain intact.Despite a profit warning,the company is still awash with cash and can give dividends normally.With the shilling losing against the dollar,agrics may make a windfall.