Monthly Archives: March 2005

Bank Jobs

Managing Director: PostBank
Previous MD, Esther Koimett, was appointed the new Investment Secretary, and now the Kenya Post Office Savings Bank is looking for a new managing director. The Bank is seeking a banking license to enable it to lend money to the public and also wants to sever its links to the Post Office network in Kenya.

Applicants must have a bachelor’s degree in business, finance or accounts, with an MBA in Finance or Strategic Management. Also 5 years senior management experience in a bank, finance or micro-finance institution. Apply by April 8, ref MDBP/32/05, to esd@kpmg.co.ke or Executive Selection Division, KPMG Kenya, P. O. Box 40612-00100.

Branch Manager: Transnational Bank
Reporting to the CEO candidate must be aged 35 – 45 years with professional banking qualifications as well as 7 years senior management experience (incl. 4 years in corporate credit)
Apply by April 1 to the Human Resource Manager, P. O. Box 75840-00200, Nairobi.

Kenya Airways Says NO to Miami

As he announced a new flight to China (Nairobi – Dubai – Shanghai), Senegal (Dakar), and other countries by August, MD Titus Naikuni stated that Kenya Airways (KQ) would not be flying to Miami. They had received an invitation to fly there from the City of Miami, but after crunching their numbers, and looking at the competition, KQ concluded that it would not make financial sense to fly to the US at the present time.

Also, a KQ workers union (Kenya Aviation & Allied Worker’s Union) issued a 21-day strike notice to the airline. So it’s possible that some workers at the airline may go on strike in mid-April.

Bank Round-Up

National Bank of Kenya
NBK’s net profit went down from 404 million to 383 million, mainly as a result of increased provision for bad debts – the bank provided 1.7 billion, up from 1.6 billion in 2003. The Bank has so far provided for 12 billion of its 17 billion bad debts portfolio.

The main component of their profit was an increase in foreign exchange income from 92 to 274 million. During the year loans to customers increased from 21 to 24 billion, and customer deposits increased from 20 to 22 billion. It is still not an efficient Bank – given that with assets of 30 billion, it only returned a profit of 300 million – and still can’t pay a divided as it must re-coup its losses of previous years first. The Bank received capital from the Government of 500 million, but has zero shillings in government securities. Shares in NBK are trading at 19 shillings (in the last year, low has been 13, & high has been 36 shillings) on the Nairobi Stock Exchange.

Transnational Bank
The most unusual result comes from TNBL where after tax profit increased 10X from 118 million to 1.04 billion in 2004. Customer deposit s more than doubled, from 523 million to 1.2 billion, while loans increased from 685 to 876 million. The staggering profit comes from other income of 837 million during the year – probably a write back as someone paid of a big political loan that had been written off.

Fina Bank
Fina is the only major bank, so far, to declare a loss for the year ended (42 million, down from a 75 million profit in 2003). The main component of the loss was an increase provision for bad debts from 88 to 205 million. Also staff costs and operating expenses increased by 33 and 50% respectively (both at about 130 m), while deposits and loans remained relatively unchanged at 5 and 2.6 billion respectively.

Stanbic
Standard Bank of South Africa, which was the only major bank to declare a loss in 2003 (104 million), turned things round in 2004 to return a profit of 118 million. It appears to have been saddled with some unprofitable loans in 2003, because in 2004, interest income increased from 183 to 368 million. Also it reduced is investment in government from 3.1 to 1 billion during the year, and shifted the funds to customer loans, which went up from 4 to 7 billion at the end of 2004; however deposits remained flat at 8 billion.

Development Bank of Kenya
DBK which is going to merge with HFCK, had a reduced profit during the year of 65 million, down from 92 million in 2003. Customer deposits decreased from 613 to 469 million. The bank which is supposed to be a development finance institution, doubled its investment in government securities from 646 million to 1.2 billion

Business Brief’s

Bye, Bad Cheques
It is now a criminal act to write a bouncing cheque in Kenya.

Bye, Makhtar Diop
World Bank Country Director, for Kenya, (and Eritrea & Somalia), Makhtar Diop will leave Kenya after his term ends on April 30. He will move on to Washington DC to work on term ends in April.

Faulu Kenya Bond
Micro-financier, Faulu Kenya launched a bond to raise 500 million shillings which will be used to expand its operations around the country.It is 75% guaranteed by the French Development Agency and was arranged by Stanbic Bank.

Former KWS Director wants $20 million
Evans Mukolwe has sued the Government for 1.6 billion shillings (US$ 20 million). He was unceremoniously dumped by Minister Tuju after the fiasco where the Kenya Wildlife Services recruited politically connected individuals.

Banking & Health Care: Parliament vs. President

During his December 2004 Christmas holiday, President Kibaki gave his assent to the few Bills that Parliament had passed during the year, with two notable exemptions – the Banking Bill and the Health Insurance Bill.

Now populist MP’s eager to show that they represent poor Kenyans are clamoring for a fight to see that these two bills are passed.

The president objected to the National Social Health Insurance Bill 2004, because of the monstrous cost of the plan. He indicated that it should be implemented in financially feasible phases. MP’s are arguing that the rich (excluding themselves) should pay for the health care of the poor through taxes under the new scheme.

And his objection to the Banking (Amendment) Bill 2004, is because it contains a controversial clause known as the “in duplum rule” – which basically caps the amount that someone has to repay on a loan they default. I.e. if you take a loan of 1 million shillings and default on it, a Bank can only charge interest and penalties up to 1 million shillings – capping the amount you may be asked to repay at 2 million shillings. MP’s insist that the clause will stop poor Kenyans from being ripped off by foreign Banks.

Under the current law, there are people who defaulted on 1 million shilling loans, and have paid several million in penalties, and still owe more million in penalties to the Bank. Donors and the major Banks and donor organizations have objected to the clause, insisting that a free market can set its own rates.