AXYS Investment Bank Research Updates

Today’s News Highlights • Intrigues in KQ investor hunt as Kamal departs Conflicting interest have delayed Kenya Airways' turnaround plans even as the national carrier's acting CEO George Kamal exited abruptly after eight month on the job. Multiple insiders familiar with the airline's turnaround plans revealed behind-the-scenes intrigues that saw a strategic investment offer scuttled in January 2026 after interest groups demanded that the 'field be opened to more players'. At least four firms had expressed interest in KQ, as the airline is popular known, with proposals including cash injections or providing airplanes in exchange for a strategic equity stake in the airline. • Kenya loses Sh22bn in US diaspora cash on Trump tax The amount of money sent home by Kenyans living and working in the United States dropped by nearly Sh22 billion in the first half of 2026, as the fallout from President Donald Trump's tax policies and the economic shocks of the Iran conflict took its toll. New Central Bank of Kenya (CBK) data shows remittances from the US fell 12.6 percent to $1.178 billion (Sh152.50 billion) in the six months to June 2026, down from $1.348 billion (Sh174.50 billion) a year earlier. This was the sharpest decline since Kenya began publishing remittance data by country. The decline wiped out $169.5 million (Sh21.94 billion) from Kenya’s biggest source of diaspora cash and pushed US inflows to their lowest first half level since 2021. • CBK rejects Sh20 billion as bidders seek higher rates The Central Bank of Kenya (CBK) rejected Sh20.4 billion offered by investors in the two reopened September bonds as it sought to keep a lid on the government's borrowing costs in a highly liquid market. The State's fiscal agent accepted Sh47.7 billion out of the Sh68.1 billion offered by investors, some of whom are looking to reinvest funds received from maturities and coupon payments worth Sh172.9 billion last month. The CBK was looking to raise Sh60 billion from the reopened 15-year and 30-year bonds which have 7.9 and 14.4 years left to maturity respectively. Investors bid Sh57.1 billion on the 15- year paper, seeking average returns/oft2/8200/Windows percent incorporating a discount on the bond's9s to activate coupon or fixed interest rate of 12.34 percent. • Blow to Uber and Bolt drivers as court blocks 18pc commission cap The High Court has blocked enforcement of an 18 percent commission cap charged on drivers and vehicle owners by ride-hailing platforms, marking a win for operators who had opposed the limit. The State restricted commission payouts on earnings per trip in 2022 as part of a strategy to protect drivers from high fees, down from previous rates that often reached 25 percent. At the same time, the court stopped the National Transport and Safety Authority (NTSA) from enforcing a requirement that digital taxi platforms retain detailed passenger and driver data and hand it over to the authority. The court found the three-year data retention and disclosure requirements unconstitutional and disproportionate, saying it's to activate amounted to continuous surveillance of customers and drivers. • Bank loan defaults dip Sh40bn on lower rates The value of loans tapped from Kenyan banks for which borrowers have not serviced for at least three months fell by Sh40.1 billion in the year to June 2026 amid a decline in borrowing rates that have eased pressure on customers. Central Bank of Kenya (CBK) data shows gross non-performing loans (NPLs) fell to Sh688.2 billion by the end of June from Sh728.5 billion a year earlier even as the banking sector expanded lending. Gross loans increased by Sh498.2 billion or 12 percent to Sh4.65 trillion from Sh4.15 trillion over the period, pointing to an improvement in asset quality as lenders grew their loan books. The decline in bad loans came as CBK eased its monetary policy stance, cutting the Central Bank Rate (CBR) to 8.75 percent at the end of June from 10.75 percent a year earlier. Courtesy: of Business Daily

Equity Group Valuation Update We maintain a BUY recommendation on Equity Group, with a revised 🎯 target price of KES 126.32, implying 26.3% upside from current levels. Rising regional subsidiary contributions Growing non funded income Growing non funded income Improving asset quality We see further upside ahead. Please download our report for more details

Today’s News Highlights • State eyes new Sh39 billion loan for stadium upgrades The government has set a target to borrow Sh38.74 billion against the Sports Fund to complete the construction of 33 new and existing stadiums across the country. The new facility will mark the second securitization under the Sports, Arts and Social Development Fund (SASDF), after the Sh44.8 billion Talanta bond whose proceeds are in use in the construction of the 60,000-seater Raila Odinga Stadium in Nairobi. The Sports Fund is already recruiting a transaction advisor and lead arranger to structure the new loan, which is expected to match the Talanta bond's 15-year tenor. • Telcos to wait 6 months before deactivating dormant lines Telecommunications firms, including Safaricom and Airtel, will be blocked from reselling dormant SIM cards until a six-month window lapses, adding compliance obligation costs for networks that have been recycling inactive lines after three months. For subscribers, the move will give them more control over their lines as they will be able to go for longer without making purchases of services such as calls before they lose their SIM cards. New rules proposed by the Communications Authority of Kenya (CA) require the service providers to contact owners of dormant SIM cards and give them three more months to revive their lines - typically through making new purchases of airtime and data. • Kenya food import bill jumps 21pc amid crop failure Kenya's food import bill has climbed to near-record levels amid widespread crop failure due to drought, signalling deeper reliance on markets abroad for supplies to feed households. The value of food and beverage imports rose by 20.6 percent to Sh169.02 billion in the January-June period. This is Sh28.88 billion higher than Sh140.14 billion in the same period last year, the latest provisional official data show. The latest bill is Sh4.25 billion below the Sh173.28 billion recorded in the first half of 2023, when Kenya encountered one of its worst droughts in decades. The rebound reverses two consecutive years of declines, with food imports falling 14.5 percent in 2024 to Sh148.18 billion and a further 5.4 percent to Sh140.14 billion in 2025. • Kamal pushed out of KQ just months into the job Kenya Airways (KQ) board of directors yesterday kicked out George Kamal as acting group managing director and chief executive officer and replaced him with the company secretary and head of legal Habil Waswani, who also takes over in acting capacity. Kamal held the position since mid-December last year, when he took over from Allan Kilavuka, who went on terminal leave ahead of the expiry of his tenure in April this year, holding the interim position for just over eight months. KQ's board chairman Kiprono Kittony said in an internal communication that Mr Kamal's leadership at the airline has steered it across a turbulent time, but did not disclose the reason for letting him go. • Investors snub securities borrowing, lending scheme on share price rally Investors on the Nairobi Securities Exchange (NSE) are snubbing a scheme that allows for lending and borrowing of securities, put off by a rally in share prices. The scheme, also known as the securities lending and borrowing (SLB) program, is a regulated financial process where an investor temporarily transfers shares or bonds to another party for a fee. Under this arrangement, commonly referred to as 'short selling', traders borrow shares to sell them immediately, hoping the price will drop so that they can buy them back cheaper and make a profit. But with the prolonged bull market run on the NSE, borrowing shares has become risky, and investors are scared that if they borrow a stock, its price could jump even higher the following day, forcing them to buy it back at a massive loss. Data from the Central Depository and Settlement Corporation (CDSC) shows that the SLB program, which was introduced in 2020, has recorded only 23 successful transactions over the last six years. Courtesy: of Business Daily

Today’s News Highlights • Kuscco liquidation vote costs saccos Sh11 billion Sacco members look set to lose at least Sh11.6 billion after Kenya Union of Savings and Credit Co-operatives (Kuscco) was put into voluntary liquidation, dimming the legal push for co-operatives to fully recover investments in the umbrella body. Kuscco members on Friday voted to wind up the central body after failed attempts to revive it from insolvency. The vote means that saccos owed nearly Sh17 billion will only recover Sh5.4 billion from its known assets, casting doubts on recovery of the Sh11.6 billion balance. A forensic audit unearthed theft and the cooking of financial books to the tune of Sh9.3 billion following understatement of costs like commissions and interest expenses and overstating incomes-a scheme which saw Kuscco book phantom profits. • Kenya Pipeline IPO, Mansa X earn dealmakers and brokers Sh9.8bn Stockbrokers and investment banks nearly tripled their revenue in the first half of this year, lifted by Faida Investment Bank's transaction fees from the Kenya Pipeline Company's initial public offering (IPO) and Standard Investment Bank's Mansa X Fund fees. A Business Daily analysis of the industry financials shows that the market intermediaries collectively booked income of Sh9.88 billion in the six months to June, up from Sh3.7 billion they booked in the same period a year earlier. The higher revenue resulted in a tripling of the industry's net profits to Sh3.59 billion from Sh1.15 billion, offering owners of brokerage firms and investment bankers juicy dividends. • Businesses count losses, travellers miss meetings as airport workers' strike bites Hundreds of passengers travelling through the country's main airports, including the Jomo, Kenyatta International Airport(JKIA), were stranded for a second day on Monday, while airlines and other service firms suffered losses as industrial action by aviation sector workers continued to bite. The Kenya Aviation Workers' Union (KAWU) said the strike at the JKIA was due to a range of grievances, including the inability to conclude a collective bargaining agreement with the Kenya Civil Aviation Authority and a lack of cooperation from the Kenya Airports Authority (KAA) and Kenya Airways subsidiary, Jambojet. • Nock's revival plan fails as Rubis Kenya walks away National Oil Corporation of Kenya's proposed deal with French oil major Rubis fell through, dimming hopes of reviving the struggling State-owned oil company. Sources say the government failed to clear the over Sh10 billion loan that Nock tapped from KCB Group and Stanbic Bank years ago, leading to collapse of the deal. Payment of the loans was one of the key conditions from Rubis Kenya whose parent firm is Paris-based Rubis SCA. Nock and Rubis had inked an agreement in 2024 but closing the deal was pegged on a number of conditions that the French oil firm gave, including commitment from the National Treasury to pay the loans. The Ministry of Energy and Petroleum and Rubis had not responded to queries over what led to the collapse of the deal. However, a source said that failure to clear the two bank loans was a major reason why the joint venture flopped. • KRA's Sh3.2m benchmark: Are we taxing non-compliance or small business? When traders close their shops and take to the streets over a customs valuation decision, we should resist the temptation to reduce the debate to the familiar argument of taxpayers versus the taxman. There is a much bigger question at stake. How should Kenya enforce tax compliance without making legitimate enterprise increasingly difficult to sustain? The controversy surrounding the Kenya Revenue Authority (KRA)'s revised customs benchmark for general consolidated cargo provides an important test. KRA has increased the minimum benchmark for a 40- foot container of general consolidated cargo from Sh2.5 million to Sh3.2 million, a 28 per cent increase. Courtesy: of Business Daily

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