DAR ES SALAAM Stock Exchange (DSE) equity market is tipped to enter a bullrun driven by positive banks first quarter results.
The equity market analysts projected the bullish trend following the last week trading, where volume and turnover rebounded 86.64 per cent on week-on-week basis.
Vertex International Securities Advisory and Capital Markets Manager, Ahmed Nganya, said the banks’ first quarter results signal strong performance going forward for the bourse.
“We expect banks’ first quarter results to boost equity market performance [this] week,” Mr Nganya said in the firm’s latest weekly market review.
The firm said the market validated their previous week forecast on volume and turnover picked up, as block trades continue.
Zan Securities Chief Executive Officer Raphael Masumbuko noted that the equity market was gaining a positive momentum and showing an increasing appetite from both local and foreign investors.
“We anticipate this participation trend to continue for this new month of May,” Mr Masumbuko said in the firm’s Weekly Market Wrap-Ups.
CRDB and NMB, two largest banks in the country, reported strong performance in quarter one despite coronavirus and beginning of the year challenges.
CRDB pre-tax profit surges by 36 per cent to 62bn/- and NMB tax before profit climbed 34 per cent to 93bn/-.
CRDB’s Managing Director and Group CEO, Abdulmajid Nsekela, attributed the upsurge in operating income and profit to the increase in interest and similar income.
“We are off to a strong start in [this year] with impressive earnings for the first quarter,” Mr Nsekela noted.
NMB’s Managing Director, Ms Ruth Zaipuna, said over the weekend that the solid performance reflects continued revenue growth momentum, disciplined cost-optimization, and enhanced loan portfolio management.
“We had a promising start,” Ms Zaipuna said in a statement, since “we have a firm grip on cost and risk.”
During the week ended last Friday, CRDB ascended by 6.98per cent to close the week at a price of 230/-.
“The bank’s appreciation is based on the expectations of a handsome dividend despite the uncertainties of regulatory approvals from the Bank of Tanzania,” Orbit Securities said in its Weekly Market Synopsis.
NMB, another major mover for the last week, moved 500,000 shares at a price of 1,700/-, accounting for 26.9per cent of the total turnover.
However, some economists are skeptics on the banks increasing profit while credit to private sector subbed due to coronavirus pandemic.
“This is real an interesting move especially at the time banks are said to make huge profits as it is emerging on first quota published data,” Dr Hildebrand Shayo, an economistcum- investment banker said.
However, Bank of Tanzania (BoT) latest Monthly Economic Review showed economic activities recorded a strong positive credit growth largely representing lending for micro and small enterprises.
“In terms of share to private sector credit outstanding, loans extended for personal activities continued to dominate, followed by trade and manufacturing activities,” BoT report added.