Bank stocks have so far made people smile,the narrative here was bank stocks won't do well,wazua can be misleading if you take words like law

Nic is next wait for 45-50

The current ‘rally’ shall injure some.. Look at it, why would a share trade at higher value with flat or even worse decline in both NII & PBT.. The NFI game is heating up and so far Safaricom is king. Banks valuations are largely false right now, across the tiers

Agreed. Those chasing prices are headed for extremely choppy waters. The guys who bought financials as a fear play during the rate cap sell-off have made a pretty penny. Extrapolating that rally to the period after the rate cap is lifted is erroneous.

NASI hit an all time high yesterday at 186.6 with the NSE20 checking in at 3840 inches below a critical resistance point @3850. I think we have attained the March high as previously alluded to. Don't see much upside from here. Calling for a top. Bulls should get concerned if the downleg breaches 3450.

Ignore the share prices for the discussion below.

I expect most (not all eg NBK) banks will have a better 2018 and a solid 2019 as far as the EPS/PAT is concerned and NPLs:Loans ratio will start dropping. CETERIS PARIBUS.

Ironically, the "horrible" interest rate caps and IFRS 9 forced banks to re-look at their loans/borrowers/systems and adjustments were made.

Banks are more judicious about lending (KYC, credit scoring), have invested a lot more in (safe but high yielding) GoK paper, reduced overheads (closed branches) and systems/processes are being improved to reduce costs.

That's OK in an uncertain environment. If a bank perceives lending to non-GoK institutions is riskier on a risk adjusted basis then it should continue lending to GoK.

When Wanjiku's risk-adjusted return [including fees and commissions] > GoK then start lending to Wanjiku.

We often do the same in our investments. When we think we can get more from T-Bonds/Bills vs investing in stocks/land/business, we do so. When we see a possibility of stocks outperforming other assets, we shift our resources.

In an uncertain environment, a bank's primary goal should be to PRESERVE customer deposits... A bank can risk its own funds but should be prudent with depositors' funds.

Banks continued judicious lending to "Wanjiku" since she provides other sources of income eg commitment fees, trade finance fees, fees on debit cards, fees on all sorts of other services, etc.

Well, Safaricom split isn't happening, at least not the way most imagined.
T-Kash is another way to slice it up.
Safcom could be on its last bull run for a while

The bulls refused. Nairobi 20 decreased 26 points or 0.69% to 3745 on Wednesday April 18 from 3771. 3676 is the area to watch next. Safaricom is taking us gently down the stream

These rock and roll type of rallies don't last long. Remember the one in 2010 after GFC...hard and fast...I tried chasing prices but couldn't then came the drop soon after. This one had all the characteristics of the 2010 rally down to a tee. Felt toppish after the August top which was followed by a consolidation (for six months) then the bottom falls out. Not to mention the bull was mainly pushed by banking stocks plus safaricom and all had heavy legs. Waiting to see how deep the correction will be which is mostly going to be determined by the severity of the fiscal crisis.

ION, 10yr UST is about to vault past the 3% mark, KES touched sub-100 intra-day(with a record reserve ammo to boot), crude is toppish at >$70pb and the USD is just coming out of a multi-year low. Reversals abound.