Category Archives: Citibank Kenya

2008 Kenya Bank Review

What happened in 2008?
See also half year. (who?, what? means no news of note)

ABC: (25) who?, what?
Bank of Africa: (18) Quiet expansion becoming big in asset finance and the bank of choice for French interests, with a new club for small business owners
Barclays: (2) steadying their 2007 rapid growth and expansion in the retail sector, launched two tranches of bonds at affordable prices which made CBK notice and will go into mobile messaging next year
Baroda: (14) Going retail, and opened new branches, no longer playing safe and investing less in GoK securities
CFC Stanbic: (4) merger (takeover) by Stanbic formalized. Collapse of small brokers a boon as they are seen as being safe(r). Will open branches and may need to raise capital next year. Note: If the merger had been planned this year (instead of last) it would have cost ½ as much
Chase (22) one of the fastest growing banks in ’08, ventured into stockbrokerage, but may need to raise capital next year
Citibank Kenya: (8) best return on assets in sector, but with aggressive off balance sheet. Still unclear how much parent troubles will impact subsidiaries in Africa.
City Finance: (43) the country’s smallest bank effected a capital reduction. New owners yet to settle in, but may achieve a slight profit this year
Commercial Bank of Africa: (7) would be a beneficiary of American business interests following Citi bank woes, if it didn’t also own 1/3 of equally troubled AIG Kenya. Also CEO got caught up in Uchumi corruption case and may need capital next year.
Consolidated: (31). Cabinet has approved sale for next year and the deposit protection fund has always planned to exit. 2008 will mark the third year of (modest) profits for the bank, so its eligible for an NSE listing or IPO
Cooperative: (5) went ahead with an IPO and NSE listing late in 2008 in a difficult market to raise capital for expansion
Credit: (35) who?, what?
Development Bank of Kenya: (26) in play next year as GoK (ICDC owns 90%)plans to sell shares in the development finance institution to the public or private investors
Diamond Trust: (11) continued regional expansion with more investments in Uganda and Burundi, and also had a second rights issue to raise capital.
Dubai (42) quiet year, will make a loss
Ecobank: (19) arrived in Kenya big and are setting up retail presence (nairumor that they are the bank Equity emulated to succeed). Came up short in a (huge) pan-African capital raising move, but plan to enter stockbroking next year
Equatorial: (30) activated investment banking wing, but denied they were being sold to Libyan investors
Equity: (6) stellar growth continued though January ’08 showed an exposure to political undercurrents. Bounced back with branches in Nyanza, agricultural products and participation in the Safaricom IPO. Bought a Ugandan bank and are investing in S. Sudan in a diversification move they hope to take their model (bankign the unbanked) to more African countries.
Family Bank: (20) quiet year, but income tripled in ’08 and new CEO was confirmed
Fidelity: (33) who?, what?
Fina: (21) the Rwanda turf was invaded by a host of other Kenyan banks led by KCB. Continued a much heralded focus on SME‘s and expanded into Uganda.
First Community: (40) the second Shariah bank got off to a much quieter start than Gulf and will record a major loss this year from setting up operations.
Giro: (27) who?, what?
Guardian: (28) who?, what?
Gulf African: (36) new Shariah bank seems to be well received and respected by business people. Opened several branches and will also assist the GoK youth fund with loan products, but will make a loss this year from start-up costs.
Habib AG Zurich (24) who?, what?
Habib Bank (34) who?, what?
Housing Finance: (15) had a fully subscribed (just) rights issue that raised Kshs. 2.4 billion and Equity Bank now own ¼ of the institution.
Imperial (16) who? what?
India (17) who?, what?
I&M (12) new formal name for the former investment & mortgages bank, also got new shareholder capital (two euro dev banks) and opened new branches
KCB (1) Kenya’s top bank this year had another rights issue, rebranding and supported expansion to Uganda, Tanzania, South Sudan in addition to being cross-listed.
K-Rep: (23) surprising loss will be recorded as it appears the post election violence impact small enterprises they financed.
Middle East: (38) who?, what?
National Bank of Kenya: (9) went big in the Safaricom IPO (and to a lesser extent with Co-Op). Some activity expected nest year as the government and perhaps NSSF shares may be in play for a strategic investor now that their balance sheet is largely cleaned up
NIC (10): rebranded again this year, phasing out MOVE and establishing new branches as a one-stop shop for corporate, asset finance, investment banking (acquired Solid Stockbrokers) needs.
Oriental: (41) former Delphis bank should have an operating profit this year
Paramount Universal: (39) who?, what?
Prime: (13) a year of rapid growth for this bank, big with Asian business owners, but may need to raise matching capital next year
Southern Credit: (29) who?, what?
Standard Chartered: (3)steady, least aggressive of the big banks in Kenya went after the retail crowd this year with personal loans, cards and youth accounts. Will launch mobile app next year
Transnational (37) who?, what?
Victoria: (32) who?, what?

Major Stories
1. CBK eternally optimistic governor, lowered bond prices, lowered cash ratio and – but statistical /economic forecasts called into question, and mired in sale of the Grand Regency Hotel
2. Safaricom the bane of banking sector was M-pesa and the company’s IPO
3. Capital raising: through right issues, private placements and IPO (Co-Op) more are expected

Coming soon
banks expected in 2009
– UBA
– Faulu or KWFT

Bank waters

In the pool

Diving in: Another West African bank giant UBA follows Ecobank after apparently having secured a banking license to operate in Kenya.

Treading in the shallow end: Still finding their ground are the new Islamic BanksGulf African and First Community that started business last year. They are likely to be the only banks that will record losses of at least Kshs. 200 million each as their new branches and staff continue to reach out and educate customers on a new way to bank.

Had enough swimming?:
(i) Morgan Stanley who were supposed to introduce long term foreign investors to Kenya with a five year window or longer, but instead brought in short term investors at the expense of the Government and othrr investors who took out their profits in a week. Another lesson learnt a long way back from the IPO.
(ii) The Kenyan unit of Citi is on track to rake in profits of $50 million this year on the back of aggresive trading, but will it be enough, or will it be bled off by the parent unit? And who would buy it and its lucrative American interest-linked business portfolio?

Safaricom IPO: Day 2

Apply online: For Safaricom shares, check out the Official IPO site from Citi

Bears bleed
NSE Bears: For the second day of the Safaricom IPO era, only 3 NSE shares rise, same as on Friday, while the rest drop or are flat.
Farewell: To Bear Stearns sold for $2 a share, down from $170 a year ago and 7% of what it was worth on Friday.

Vultures circle:
Beware of loans for shares
– Equity Bank offering up to 80% finance for the Safaricom IPO
Fanikisha account from Transnational Bank offering 70% finance towards the IPO

edit – We’ve been Punk’d!
Corporate blog: A big salute to Equity for breaking another milestone – presenting the first official bank blog – here’s the Equity Bank Blog. a WIP, but keep it up, stay strong, relevant, and up-to-date
Thanks JP for looking out

Bankers’ post-election assessments

Citigroup (CITI)

  • Limited impact on economy if the political crisis is resolved. It Matters little to the economy who won the election as private sector will continue to drive growth
  • Share sell off at NSE could be a good buying opportunity as economic fundamentals unchanged.
  • President will use police and military to clamp down on protests which themselves will not last more than a few weeks
  • Parliament loyalties will be split by president as MP’s vote with their stomach
  • There’s little the international community can do besides pushing for reforms.
  • Also in the pre-election period, the opposition may have been falsely buoyed by opinion polls which are not sound (& could the same thing have happened to Obama in New Hampshire ?)

Renaissance Capital (RENCAP)

  • Crime wave has emerged under the guise of political riots
  • Government may take all 12 nominated seats in parliament
  • Reemergence of the civil society and NGO’s as source of political pressure and search for solutions.
  • Main threat is if two parties don’t agree so may revise down the 6 – 7% GDP projections.
  • Also prices have not factored in the chaos, so investors should hold off on buying.

Thanks to Silaha for the 2 reports – and who has also blogged some post-election predictions for Kenya

Treasury Officals:– from Business Daily

  • Damage on the economy could cut the projected growth by as much as a half, if not worse as agricultural, financial services and tourism sectors are likely to under perform
  • Treasury could be forced to craft a stimulus economic package to help reconstruct the affected regions and
  • Lower the interest rates in the economy.

Central Bank Governorfrom Reuters

  • Kenya can still achieve 8% growth in 2008
  • Disruptions were temporary and will have a major impact on GDP growth
  • Shilling’s depreciation was due to holiday period
  • Safaricom IPO in the first quarter of 2008
  • Interest rates will not change

World Bank
(Hat tip Kumekucha) There’s a controversy brewing of the World Bank’s assessment of the election and resultant crisis

Excerpts;

  • The considered view of the UN is that the ECK announcement of a Kibaki win is correct. More irregularities of consequence on the Odinga side than on the Kibaki side.
  • The process of arriving at the result created a crisis of confidence due to missteps by (a) the ECK chair (who joked about possible rigging during a news conference), (b) the vocal EU observer who was not thorough and precise in analyzing information provided to him (c) the lack of preparation by Kibaki’s party in dealing with a highly media-savvy opposition.
  • Moving forward. One option being explored is getting them to agree to a recount which, by law, has to be done through a petition to Kenya’s High Court. Eminent persons from abroad would monitor this recount. Meanwhile, Kibaki would proceed to form a Cabinet, possibly with some participation by Odinga supporters. It is unclear what would happen if the exercise arrived at a different result from the ECK decision. The gamble is that this would not happen and that even if it did, both sides would have a face-saving way to accept a change in course via-a-vis their supporters

This is not the first time the first time that the land-lord-tenancy arrangement between the President and the World Bank has been put to question – see here and here

Finally, not sure if she’s a banker, but Kenyanentreprenur argues that what Africa needs are development minded dictators since we are not ready for democracy – and I hope we won’t be having this debate in 2012!

My own take is that the people at the Coast, Nyanza, Rift Valley and Western provinces need to start rebuilding their lives and their industries – otherwise they will be left behind. Rioting in your own community is dumb as you destroy businesses that deliver services and create jobs within the community. So pass that message along with any peace & sympathy messages you convey. Also watch NTV’s great Voices of Reason program on Youtube that looks at pre- and post-election issues (more on that later).

Bank Review ’07: Part III

Middle of the pack

20. (20) Fina Bank: Estimated assets of 7.6 billion ($108 million) and profits of 90 million shillings ($1.3 million), with growth of about 20% from a year ago. Opened upcountry branches in Kenya (Nakuru, Mombasa, and Eldoret) and will start branches in Uganda next year, bridging the Fina to their existing Rwanda operations.

19. (22) Family Bank: Estimated assets of 9 billion and profits of 220 million in 2007. Known as Equity Blue, it has enjoyed similarly rapid growth (though slightly less this year) since converting from a building society to a bank. It has followed Equity’s footsteps, applying for the same exemptions granted to Equity – such early as admission to the clearing house and permission to issue chequebooks. It has also opened branches at a fast rate and its paperless banking model and women-entrepreneur loan models are a hit with rural Kenyans. But, in the year in which they converted to a Bank, they also lost their long serving CEO over board dispute and got sued by a Central Bank official who their Chairman had accused of being corrupt.

18. (18) EABS: Estimated assets of 9 billion and profits of 15 million. Teething pains continue at the former building society which converted to a bank three years ago, and had growth of about 5% in 2007.

17. (17) Housing Finance : Estimated assets of 10.5 billion and profit of 120 million, with loans 15% up from a year ago but assets only 2%. The bank tried to merge with Development Bank of Kenya, and later raise cash in a rights issue, but both plans were scuttled by regulators; later the board signed to sell a 25% stake to Equity Bank. HFCK and S&L (owned by KCB) are still major players in the mortgages sector which is becoming a crowded field with newer entrants Stanbic and Standard Chartered. HF also lost a class action lawsuit filed by customers over illegal bank charges.

16. (19) Bank of India: Estimated assets of 11 billion and profit of 500 million for quiet bank that grew at about 25%. Does a lot of India related business and Kenya government securities.

15. (16) Imperial Bank: Estimated assets of 11.5 billion and profits of 600 million. In 2007, the bank grew about 40% as it launched shariah banking, asset finance, children’s accounts and opened new branches at the coast.

14. (14) Bank of Baroda: Estimated assets of 14.9 billion and profit of 600 million for quiet bank that grew at about 25% and does a lot of Kenya government securities investing. It has been in Kenya for 52 years

13. (15) Prime Bank : Estimated assets of 15 billion and profits of 350 million. The fast growing bank will consolidate with affiliate Prime capital company by year end leading to a much larger bank in 2008.

12. (11) Investment & Mortgages: Estimated assets of 30 billion and profits of 1.3 billion. Fast growing bank also diversified into shariah banking, custodial services and also acquired two new euro bank shareholders.

11. (12) Diamond Trust : Estimated assets of 31 billion and profits of 950 million. In 2007 the bank grew about 45% as it opened several new branches, had a second rights issue in less than a year and also acquired a majority stake in Diamond Trust Tanzania.

10. (8) NIC: Estimated assets of 34 billion and profit of 1.1 billion. The bank grew at about 30% in 2007. It had a rights issue, rewarded shareholders with a bonus, went into custodial and investment banking (acquiring a stockbrokerage firm). But the market leader in asset finance also faced increased competition from other banks in this field and was dropped from NSE share index in favour of ICDCI.

9. (5) Citibank Kenya: Estimated assets of 38 billion and profit of 1.9 billion shillings. Otherwise a flat year for the bank whose parent faced her own troubles in the US banking meltdown. Growth was about 5% as the bank got into the local IPO advisory races.

8. (6) Commercial Bank of Africa: Estimated assets of 40 billion and profit of 1.4 billion. Growth of 9% from a year ago got into unit trusts, home loans, insurance, and funding of women projects. Similar to CFC and would be prime candidate for a merger.

7. (7) National Bank of Kenya: Estimated assets of 45 billion ($645 million) and profit of 1.4 billion shillings ($20 million) for 2007. NBK finally had its most of its non- performing portfolio debt albatross sorted out with a government bailout in the form of bonds maturing over the next 10 years. Now that its cleaned up, it could once again be a target of Stanbic again who two years ago offered to buy out NSSF’s 48% after their CFC merger is done in 2008 (Equity Bank is a also long shot). During the year, NBK partnered with Standard investment bank offer stockbroking services through NBK branches and also tried to have businessman Ketan Somaia jailed over an unpaid debt to the bank

Jobs

Chase Bank; Head of ICT, senior manager operations, head of trade finance. apply by snail mail to the Head of HR 28987-00200 by 29/2
– Cabin crew at Emirates airlines
Fina Bank Uganda: The bank is starting operation in Uganda in January 2008, and those interested in working there should send detailed CVs to hr@finabank.com.
tough job – Head of marketing & corporate communications at Kenya Airways apply online by 15/1