AXYS INVESTMENT BANK Research Updates

Today’s News Highlights • How State firms were forced to buy Kenya Pipeline shares The State pressured cash-rich parastatals to buy into the initial public offering (IPO) of Kenya Pipeline Company (KPC) to avoid the sale being declared invalid after high-net worth investors snubbed the deal. Multiple people familiar with the transaction, including CEOs of parastatals and stockbrokers, reckon that the government used "strong-arm" tactics to have the State-owned firms participate in the IPO. The offer risked collapse after investors bought less than 10 percent of the Sh106.3 billion worth of shares days to the closure of the offer, striking fear in government. Four of the sources said that attention turned to parastatals, the State backed pension scheme and the Ugandan government to save the IPO from collapse. • Kenya's public debt restructure sparks default fears Ratings agency S&P Global has warned that Kenya's credit rating could be downgraded if the Treasury's frequent loan refinancing moves trigger concerns that the country is struggling to repay debts. The credit ratings agency has taken note of Kenya's debt refinancing operations, which have prompted borrowing to repay earlier debts and switching bonds to avoid paying the principal amount. It warns that the debt restructuring, which has become frequent in recent months, could send signals that Kenya is struggling to repay its mountain of public debt, raising fears of default. The fears could trigger the risk of credit rating downgrades. • Electricity imports rise further in race to avert rationing Kenya's reliance on electricity imports increased in the six months to June 2026 as the country raced to avert rationing, with the share of supplies from Ethiopia and Uganda rising to 12 percent of the total supplies to Kenya Power. Official data shows that the share of imported power on the grid rose from 10 percent in the comparable period of 2025, mainly tied to more inflows of hydropower from Ethiopia. Kenya has turned to Ethiopia to plug the gap in local electricity generation and meet a fast-growing demand, a move that leaves Kenya exposed in the event of major disruptions in the neighbouring country. Ethiopia supplied Kenya Power with 7.88 million kilowatt-hours (kWh) in the six months to June, or 10.3 percent of the total supplies, up from 7.26 million kWh or eight percent in the same period last year. • Bank of Baroda chiefs face contempt in Sh2.2bn row Bank of Baroda directors face contempt proceedings after Infinity Industrial Park accused them of using a Sh2.2 billion debt claim to take control of the company in breach of a court order. In an application seeking to have the directors cited for contempt, Infinity says the bank appointed joint administrators on August 10 despite a High Court order barring it from taking possession of or interfering with its property in Njiru, Nairobi. The dispute stems from a Sh1.9 billion loan to Infinity in 2019 to finance the industrial park on the Eastern Bypass. The loan was secured against several properties, including the industrial park land. It comprised a takeover loan from Equity Bank, an overdraft and a fresh loan. • Treasury taps 41pc of annual debt target in 2 months The Treasury has cashed 41 percent of its annual domestic borrowing target just two months into the financial year, signalling a rush to capitalize on a highly liquid market to secure early funding and plug the budget deficit. Disclosures by the Central Bank of Kenya (CBK) show the net borrowing in July and August stood at Sh406 billion, against the full fiscal year target of Sh987.4 billion. This means Treasury has already tapped 41.11 percent of its annual domestic target with 10 months to go. The government mainly borrows from the domestic market via Treasury bonds, with a smaller share coming through Treasury bills and overdrafts from commercial banks and the CBK. Courtesy: of Business Daily

Today’s News Highlights • Tycoons splash Sh133bn in fight for cement market Three tycoons are locked in a battle for control of East Africa's multi-billion shilling cement industry, embarking on an expansion spree that is stretching their empires across Kenya, Uganda, Tanzania and Rwanda. Industrialist Sarbjit Singh Rai is the latest to seek an expansion of his cement business in Kenya, after he sought to set up a cement plant in Nyeri at an undisclosed price, according to a regulatory disclosure by the National Environment Management Authority (Nema). Mr Sarbjit, who operates from Uganda, joins Kenya's Narendra Raval and Tanzania's Edha Nahdi in seeking to carve out a slice of the cement market across the East African Community (EAC), highlighting the growing flow of capital across the borders of the seven-member regional bloc. • Gen Zs and Millennials top in Kenya newspaper readership Younger generations aged 18-44 years are the strongest newspaper readers in Kenya, driven by digital access to news, a new survey has revealed. The Communications Authority (CA) said that up to 20 percent of Gen Z (ages 18-27) and up to 22 percent of Gen Y (ages 28-44) adults read newspapers across the 2025/26 fiscal year-the highest level among all age groups. Gen Y and Gen Z read newspapers using both traditional formats (print and e-editions) and online formats (website and app articles). "Newspaper reading in Kenya shows a noticeable difference between men and women, with men consistently reporting higher readership than women in all quarters. By age, people aged 25-34 years are the most active newspaper readers, recording the highest levels of readership, the CA said. • I&M beats StanChart with Sh9.3bn half-year profit I&M Group posted a 20.3 percent growth in net profit to Sh9.31 billion in the half year to June 2026, buoyed by high interest and non-interest income. The lender's profit after tax and minority interest rose from Sh7.73 billion in the previous similar period, overtaking Standard Chartered Bank Kenya to the sixth-highest profit in the sector during the half year. Standard Chartered dropped to seventh after its half-year profit fell 16.8 percent to Sh8.08 billion. Equity Group emerged top in the review period after its net profit grew 32 percent to Sh43.7 billion, followed by KCB Group (Sh36.86 billion), Co-operative Bank of Kenya (Sh18.02 billion), NCBA (Sh12.5 billion) and Absa Bank Kenya (Sh10.5 billion). • Businesses face higher costs as Meta stops free messaging on WhatsApp Kenyan businesses face higher costs to interact with customers online as Meta begins charging for messages firms send on WhatsApp in response to customer queries. Beginning October 1, the US tech giant will introduce a 52-cent charge for each message where firms are responding to customers through its WhatsApp Business platform. WhatsApp will charge Kenyan businesses $0.0040 (Sh0.52) per delivered message, adding to the features Meta has recently monetized globally. Last year, the company began billing businesses for WhatsApp marketing messages. Regional peers including Uganda, Tanzania and Rwanda will be charged at the same rates per message. • Sh50 million fine, jail for illegal organ transplants in proposed law Illegal organ transplants will attract jail terms and fines of up to Sh50million, if Parliament approves a proposed law aimed at curbing unethical practices. The Kenya Blood, Cells, Tissues and Organs Bill, 2026, tabled by James Nyikal, chairperson of the National Assembly Departmental Committee on Health, proposes the creation of the Kenya Blood and Transplant Authority, which would replace Kenya Tissue and Transplant Authority, taking over regulation of blood, cell, tissue, and organ services. Under the Bill, hospitals would require case-by-case approval from the Authority before carrying out transplants involving living, non-related donors, in addition to being licensed to offer transplant services. . Courtesy: of Business Daily

Today’s News Highlights • Kenya risks electricity cuts as reserve shrinks to 3.3pc Households and businesses face the risk of electricity rationing and black outs as consumption nears overtaking supply in what could trigger economic disruptions and costly use of diesel generators. Kenya's reserve margin the extra generation capacity available above demand has shrunk to less than 1.3 percent, which contrasts sharply to the range of between 20 percent and 35 percent that is recommended by the generators. Kenya's electricity demand has been rising steadily in recent months, but local generation capacity remains constrained. Increased imports from Ethiopia and Uganda have also failed to keep pace with demand, narrowing the reserve margin from a peak of 20.73 percent in January to 3.34 percent in June, data from the Kenya National Bureau of Statistics (KNBS) shows. • Investor offers planes in exchange for KQ strategic stake An investor has offered to give Kenya Airways (KQ) airplanes in exchange for a stake in the national carrier as it seeks a fresh capital injection to fund its turnaround plan. The undisclosed investor is among at least four firms that have expressed interest in investing in the troubled airline, acting chief executive George Kamal told the Business Daily in an interview. The national carrier is counting on fresh capital, whether in kind or cash, to expand its fleet, restore its capacity, and grow its network in an effort to turn profitable. Mr Kamal said other investors were keen on buying a stake in the airline, with another seeking to loan Kenya Airways billions of shillings for the turnaround. • Lenders reap from workers appetite for salary advances Lenders are seeing growing demand for salary advances and other pays-lip-backed short-term digital loans as workers increasingly turn to credit to bridge cash-flow gaps between pay-days. The trend is providing banks and digital lenders with a growing market as salaried customers seek quick access to funds for emergencies, bills, school fees and other financial obligations. Fresh disclosures show that Co-operative Bank of Kenya disbursed Sh41 billion through its short-term mobile credit platform, e-flexi, between January and July 2026, up from Sh35.75 billion during the same period in 2025. Salary advances from the Co-operative Bank of Kenya form a major share of its digital lending. • Ruto shifts spending to visible projects with an eye on 2027 President William Ruto's administration channeled 61 percent of the increase in national development spending into roads and housing last financial year, signaling a shift in government's investment priorities towards highly visible projects ahead of the 2027 elections. Treasury data shows development expenditure rose by Sh148.6 billion to Sh731.5 billion in the year ended June 2026, from Sh582.9 billion a year earlier. Roads and Housing and Urban Development accounted for more than three-fifths, or Sh91.4 billion, of the additional spending. The cash pumped into roads and housing rose to Sh269.2 billion from Sh177.9 billion. • Competition Tribunal paralysis stalls Carrefour, Koko and GTB appeals Ten high-profile disputes involving firms and the Competition Authority of Kenya (CAK) have been thrown into limbo after the Competition Tribunal lost the quorum required to hear and determine appeals against decisions by the regulator. The tribunal's secretary and chief executive officer, Julius Mutua, has urged Treasury Cabinet Secretary John Mbadi to urgently fill the vacant position of the chairperson, saying the institution has been unable to conduct business since September 17, 2025. The cases pit CAK against Carre-four owner Majid Al Futtaim, clean energy start-up Koko Networks, small lender Guaranty Trust Bank (GTB), steelmaker Corrugated Sheets Limited and others. Courtesy: of Business Daily

Today’s News Highlights • NSSF reveals Sh38bn stake in Kenya Pipeline after IPO The National Social Security Fund (NSSF) pumped Sh36.3 billion into the initial public offering (IPO) of Kenya Pipeline Company (KPC), unmasking the identity of the top shareholder who earlier opted to remain secret. The State-backed pension scheme got a 22.2 percent stake in the freshly listed firm, making it the second-largest shareholder behind the government, regulatory documents seen by the Business Daily show. About 90 percent of the top owners of KPC Plc bought their shares through proxies during the firm's IPO, keeping the identity of the investors anonymous. Regulatory filings show that 18 of the top 20 shareholders of KPC are under nominee accounts after demand from Kenyan institutional investors and the Ugandan government helped the IPO become oversubscribed. Without the Sh36.3 billion from the NSSF and Uganda's Sh33.8 billion, the IPO would have collapsed on failure to hit the success level. It was required to sell shares worth Sh53.1 billion of the Sh106.3 billion shares that were on offer, in what was East Africa's biggest IPO in local-currency terms. • Police, KRA gain access to parcels ferried by Uber and Bolt App-based courier platforms such as Uber, Bolt, Glovo and Little will from next month be required to verify and record the contents of customer parcels that the taxman, police and communication watchdog will access. The Communications Authority of Kenya (CA) has issued new licensing requirements that demand that online courier platforms record the contents of parcels, sender details, and recipient information. The firms will keep records and provide them to the communications regulator, the Kenya Revenue Authority (KRA), and the police upon request part of ongoing efforts to curb illicit trade in items like drugs and firearms. • Boon for hoteliers as confirmed room bookings rise Local hoteliers project higher room bookings in the four months to November 2026, reflecting a stronger conference season as international meetings and corporate travel lift demand for accommodation. A new Central Bank of Kenya (CBK) survey shows average forward bookings for August through November rose to 56.25 percent, up from 49.5 percent in a comparable period last year. Forward bookings in the hotel industry refer to confirmed room reservations secured for future dates. The bookings averaged 59 percent in August, 53 percent in September, 56 percent in October and 57 percent in November, against 49, 52, 46 and 51 percent respectively in the corresponding months of 2025. • KQ half-year loss widens to Sh16bn as costs spiral Kenya Airways' net loss for the six months to June 2026 jumped 31.9 percent to Sh16 billion after its costs grew exponentially to a record level due to the Middle East conflict. The national flag carrier's costs during the period surged by 12 percent to a record Sh97.7 billion, up from last year's Sh86.7 billion, pushing up its losses from the Sh12.2 billion reported in the first half of 2025. This was largely due to a surge in fuel costs, which rose to Sh29 billion, accounting for roughly 32 percent of its operating costs, up 66 percent from Sh17.47 billion, which was 22 percent of operating costs. • Blow to graduates as CEOs freeze hiring on jobs market pause More than three-quarters of Kenya's chief executive officers have signalled little appetite to expand fulltime jobs in the coming months, dealing a fresh blow to thousands of jobless graduates in an increasingly crowded labour market. Findings of the latest Central Bank of Kenya's CEOs Survey suggest that 77.1 percent of firms are planning to keep employee numbers unchanged in the third quarter, the highest in the series dating back to at least January 2021. It exceeds the previous high of 75.3 percent recorded in July 2024, when businesses were operating amid intense political and economic uncertainty triggered by youth-led protests against tax increases and high cost of living. Courtesy: of Business Daily

Today’s News Highlights • Junk aeroplane crisis hits Wilson Airport operations At least 90 planes belonging to private aviation companies, flying schools and individuals have been abandoned at Nairobi's Wilson Airport, choking available parking space for operational aircraft and costing the Kenya Airports Authority (KAA) revenue. An audit of the country's second-busiest airport by aircraft movements found that the abandoned aircraft have caused congestion, forcing flight diversions. It is unlikely that any of the planes will fly again, and KAA has struggled to auction the aircraft in recent years as they accumulate significant parking fees. The light planes include Cessna 402, Fokker 50, Beechcraft Baron 58, and slightly larger passenger planes such as Bombardier CRJ100s and Dash-8s. Some are clustered while others sit alone as they increasingly take up space at Wilson Airport, underlining the growing troubles at the facility. • DCI gets ultimatum over former energy bosses fuel probe Parliament has issued an ultimatum to the investigators to submit a report on the outcome of a probe of three senior officials in the energy sector arrested in April over accusations of manipulating fuel stock data and procuring an emergency cargo at inflated prices. The Energy committee of the Senate gave the Directorate of Criminal Investigations (DCI), Director of Public Prosecutions (DPP) and other State entities to complete the probe and determine the fate of the three within 60 days amid fears the investigations have gone cold. The deadline lapses on October 19 in the wake of delays in prosecuting the officials who were arrested on April 2, 2026. • Cost of running public offices up by a record Sh199bn The cost of running offices under the national government jumped by a record Sh199.2 billion in the financial year to June 30, pushing the operations bill above Sh1.3 trillion despite a continued drive to contain recurrent spending. According to the Treasury, expenditure on operations and maintenance rose by 17.82 percent to Sh1.317 trillion, up from Sh1.118 trillion a year earlier. It was the largest annual rise as per Treasury records, highlighting the growing cost of keeping ministries, departments and agencies running despite austerity measures and procurement reforms. The spending covers routine government costs like travel, transport, fuel, supplies, repairs, maintenance, hospitality, training, electricity, water and communication. • More banks chase 100-plus branches target More banks are racing to join the 100-plus branch club, even as customers increasingly embrace mobile and internet banking, signaling that physical outlets are taking on new roles beyond traditional cash and cheque transactions. NCBA crossed the 100-branch threshold in May 2025 with the opening of outlets at Tatu City and Nord Mall in Ruiru. Family Bank, which has 97 branches, plans to open another in Upper Hill this week and cross the 100 mark before the end of the year. The lender, which listed on the Nairobi Securities Exchange (NSF) last June seeks to join KCB, Equity, Co-operative and NCBA banks, which have more than 100 branches in the country. "Our 97 branches are spread across 32 counties. • How 'fake' experts triggered World Bank blacklist of e-Citizen firm Webmasters Kenya, the firm behind the eCitizen platform, has been blacklisted from World Bank-funded projects for five years after it listed two individuals as 'experts' in a tender bid document for a project in Somalia financed by the multilateral lender. The 'experts', however, later told investigators they had been listed by Webmasters for the job without their knowledge, sparking the debarment from World Bank projects. The World Bank case against Webmasters Kenya Ltd and its founder and CEO James Ayugi is hinged on how the two unnamed professionals were presented as key personnel for a contract, with the firm confirming their availability during negotiations. Courtesy: of Business Daily

oday’s News Highlights • Cheaper deposits boost bank profits A drop in deposit costs and lower loan defaults propelled stronger bank profit growth in the first half of 2026, offering continued boost after a period of expensive funding and elevated credit risk. Nine of the country's 11 banks listed on the Nairobi Securities Exchange, which have released their performance results for the six months ended June 2026, posted a combined Sh144.9 billion net profit, up 16.9 percent from Sh124 billion a year earlier. The improvement comes as banks benefit from a more favourable operating environment in which interest rates have fallen, credit demand is recovering, and the cost of funding has declined faster than lending rates. The Central Bank of Kenya cut its benchmark rate to 8.75 percent in February and has maintained it at that level, down from 13 percent at the start of the monetary easing cycle in August 2024. • Kenya seeks to unlock Sh151.2bn World Bank funds Kenya is hoping to unlock up to Sh151.2 billion from the World Bank in the current 2026/2027 fiscal year as the multilateral lender remains the country's primary source of external financing in the absence of the International Monetary Fund (IMF). A debt plan by the Treasury for 2026 shows that Kenya expects funding from three World Bank support schemes, including: Sh94.2 billion from the Development Policy Operations (DPO), Sh52 billion from the Rapid Response Option (RRO), and Sh5 billion from the program-for-results (PforR) window. The DPO scheme provides vital budget support tied to institutional and policy reforms. It helps to ease heavy public debt pressures and fiscal deficits by funding governance, accountability, and social protection. • Bond values at NSE fall as interest rates rise Bond prices in the secondary market at the Nairobi bourse have come down compared to a year ago as interest rates rise in the wake of the war in Iran, cutting the profits for those opting to sell their bonds before maturity. their half-year financial results, listed banks say they recorded a paper loss of Sh7.2 billion on the value of their government bonds due to the secondary market price movement. A sample of listed bonds shows that majority are trading at market prices that are lower compared to last year, backing the revaluation by banks. On the shorter end of the market, a three-year bond issued in January 2024 is now trading at Sh104.95 per unit of Sh100, down from Sh111.18 in June 2025. A five-year bond issued in July 2023 has seen its price fall from Sh115.56 to Sh111.47 in the period. • Final moments of helicopter that crashed, killing 7 tourists From the Mt Ololokwe summit, the vast Samburu landscape stretches into the horizon, its rugged plains and distant hills offering the kind of scenery that draws tourists for sunrise and sunset splendour. On Wednesday morning, six tourists climbed into a helicopter to experience that view. They were filming and taking photographs when their holiday turned into a tragedy. The helicopter had barely completed its third sweep over the summit when the tourists began capturing what would become their final images of the spectacular mountain. • SHA and PSC bosses face court action over ex-NHIF staff pay The chief executive officers of the Social Health Authority (SHA) and the Public Service Commission (PSC) risk personal court action for failing to implement orders to pay exit packages to employees of the defunct National Health Insurance Fund (NHIF). The Employment and Labour Relations Court has given SHA chief executive Mercy Mwangangi and her counterpart at the PSC, Paul Famba, until September 11, 2026, to address the orders or appear in court to explain why they should not be committed for contempt. The court said that a judgment issued on July 29, 2025, remains valid because the respondents have not obtained a stay. Courtesy: of Business Daily