Banking

NAIROBI (Capital Markets in Africa) — Kenya’s central bank maintained its benchmark interest rate to allow the effects of four consecutive cuts filter to the economy. The monetary policy committee retained the rate at 7%, Governor Patrick Njoroge said in an emailed statement Wednesday. That matched the projection of one of the three economists in a Bloomberg survey. The panel has reduced the rate by 200 basis points since November. Key Insights: The decision was a “surprising…

Nairobi (Capital Markets in Africa) — Kenya’s biggest bank by market value boosted provisions for loan losses more than sevenfold in the first quarter as the coronavirus struck East Africa’s largest economy. Equity Group Holdings increased provisions to 3.12 billion shillings ($29 million) compared with 410 million shillings a year earlier, while the board decided to withdraw its 2019 dividend to conserve cash during the pandemic, the Nairobi-based lender said in a statement on Thursday. First-quarter…

JOHANNESBURG (Capital Markets in Africa) — Absa Group’s warning that it may scrap its dividend for 2020 is unlikely to be the last from South African banks hard hit by the fallout from the coronavirus pandemic. “Banks won’t have certainty on their capital and liquidity positions until later in the year,” Nolwandle Mthombeni, an analyst at Mergence Investment Managers in Cape Town, said by phone. “So they might take a prudent approach.” While South Africa’s four…

JOHANNESBURG (Capital Markets in Africa) — Development Bank of Southern Africa is in talks with multilateral lenders and commercial banks to help plug a funding gap as disruptions in debt capital markets hinder its ability to sell bonds. The bank needs the extra financing to keep disbursing loans as demand jumps from countries trying to cope with the fallout from the coronavirus pandemic, DBSA Chief Executive Officer Patrick Dlamini said on a video call. Potential lenders include…

CAIRO (Capital Markets in Africa) — Egypt’s largest private lender is amassing cash so it will be able to consider dividend payouts at the end of the year when it has assessed the impact of the coronavirus pandemic. Commercial International Bank SAE has much more capital and liquidity buffers than required by regulators, giving the bank “an ample amount of firepower in case we want to increase dividends next year or keep them the same,” Chairman Hisham Ezz Al-Arab said…

LONDON (Capital Markets in Africa) — Bank of England Governor Andrew Bailey offered another hint that more bond purchases are on the way after figures showed a deep contraction at the end of the first quarter. He said it’s “pretty clear” investors expect more quantitative easing from the bank and that policymakers have kept the option open to do more than the 200 billion pounds ($240 billion) they announced in March. Investors have already stepped…

NEW YORK (Capital Markets in Africa) — The U.S. economy faces unprecedented risks from the coronavirus if fiscal and monetary policymakers don’t rise to the challenge, Federal Reserve Chair Jerome Powell said while pushing back against the notion of deploying negative interest rates. “The recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems,” Powell said Wednesday in remarks to a virtual event hosted by the Peterson…