Monthly Archives: December 2007

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

Bank Review ’07 Part II

Small banks, range from $40 to $100 million

Showed an inability to grow as faster as the bigger bank, with few exceptions. Yet they are still profitable and reluctant to merge

The banks got a temporary reprieve when parliament shot down the government’s proposal that banks should have a minimum capital of 1 billion ($15 million) 3 years from the current 250 million shilling minimum’ but that proposal is likely to be revisited by future finance ministers.

35. (38) Fidelity Bank: Estimated assets 3.2 billion ($45.7M), profit of 45 million ($0.7 million) shillings for this quiet bank with little marketing activity but which was able to grow 40% during 2007.

34. (36) Credit Bank: Estimated assets of 3,300 million and profit of 120 million, for another quiet bank which grew about 15% in 2007.

33. (33) Middle East: Estimated 3.2 billion assets and profit of 80 million in 2007. However deposits and loans are down 6% from a year ago.

32. (35) Habib Bank: Estimated 3.5 billion assets and profit of 90 million, with growth of 12% from a year ago. Participated in the first Diamond trust rights first issue as a possible merger step.

31. (29) Victoria: Estimated 4.2 billion assets 140m in profit. Flat growth expect in loans and deposits (1%), but great in profitability which is improved by over 40% in 2007.

30. (32) Consolidated Bank: Estimated 4.5 billion assets, 20 million profit with the 30% growth from a year ago. There was public fallout between the MD and the board resulting in the board being fired by the Finance Minister. The Deposit protection fund (DPF) of the Central Bank plans to sell its 51% stake to private sector, and is likely to be found next year by private sale. A loss in 2005 makes the bank ineligible for an NSE listing and the owners the collapsed banks that form Consolidated Bank are likely to figure in as potential buyers.

30. (31) Equatorial: 4.7 billion assets and 90m in profit. The Sameer group bank Out-performed corporate big sister CBA growing by about 15% in 2007.

29. (34) Development Bank of Kenya: Estimated 4.8 billion and 200m in profit. Remarkable growth fro a development finance institution to record 45% growth in loans & deposits. Part of ICDC’s (Government) 90% stake in the bank is up for sale in 2008.

28. (28) Southern Credit: Estimated 4.9 billion assets, 80m in profit. 10% growth in loans and deposits, with about 40% growth in profits in 2007. Bank with a lady MD focus on cards

27. (30) Chase Bank: Estimated assets of 5.0 billion, and profit of 130 million. The winner of small bank awards, will open new branches next year and has set about achieveing a recapitalization target of 1 billion, through retained earnings.

26. (26) Giro: Estimated 5.3 billion assets, 70m in profit. With 7% growth in the year, It was supposed to be sold to state bank of India, but the deal is yet to be approved by regulators.

25. (27) Guardian: Estimated 5.8 billion assets, 45 million profit. Growth of about 15%

24. (23) ABC: Estimated 5.8 billion assets, 170 million in profits. With 12% growth from a year ago, ABC was one of the few ‘small’ banks that had a marketing push to target new customers in 2007 in addition to a recapitalization drive. Launched ‘kisima’ a flat fee account and has new branches.

23. (24) Habib AG Zurich: Estimated 6.1 billion assets, 200 million profit for another quiet bank which grew about 15% in 2007.

22. (25) K-Rep: Estimated 7.2 billion assets, 200 million profit . With international shareholding and micro-finance expertise is an natural candidate for a merger Was 29th two years ago and recorded about 60% growth in 2007.

21. (21) Bank of Africa 7.2 billion ($103 million) assets 160 million shillings ($2.3 million) profit in 2007. What is hopefully the first of many West African banks spreading eastwards has opened new branches and targeted growth of new business like asset finance.
ddia

Bank Review ‘07: Part 1

the bottom 5

The low end of the banking sector showed little growth in loans or deposits – bank sizes are stagnant.

40. City Finance: (last year 42) Estimated assets of 650 million shillings ($9.28 million) and loss of 20 million shillings in 2007. Kenya’s smallest bank was taken over by the Baraka Fund late in the year, and is expected to be recapitalized and turned around from 2008.

39. (41) Dubai: Estimated 1,480 million assets, profit of 10m shillings.
Growth of about 3% this year, but the bank will have achieve a smaller profit than last year. Its niche branch in Eastleigh and foreign remittance product has found increased competition.

38. (40) Oriental: Estimated 1,732m in assets and profit of 200 million. The perennial loss making Oriental bank (formerly BCCI and Delphis) was recapitalized and is on track for a profit this year following a payment from the Governments’ financial restructuring of Miwani Sugar company which owed the bank a significant debt.

37. (39) Paramount Universal : Estimated 2,258 billion and profit of 45 million. Growth in assets, deposits, and loans flat this year but at least is profitable.

36. (37) Transnational: Estimated 3.03 billion ($43 million) in assets, and 90 million ($1.3m) in profit for 2007. A quiet year for the bank which introduced a Fanikisha product for customers to save money and buy IPO shares on the NSE

Bank story of the week

Which way Equity?: It’s rare to see two sides of a story from the same editorial team – but it has happened on the controversial shielding of Equity Bank’s new shareholders with the Nation newspaper editorial defending the exemption granted by the Finance Minister, after the influential Business Daily editorial (sister newspaper in the Nation Media Group) had strongly opposed the same.

Kenya Predictions Reviewed

In November 2006, I wrote some predictions in the Business Post December 2006/January 2007 issue, in which I put forward ideas, expectations, and wishful thinking for the country in year 2007.

Here’s a review of some of the Nostradamus-like thoughts:

Hit: happened Miss: did not happen Whiff: almost did, or unclear and narrative

AGRICULTURE:
– Processors launch new coffee and tea brands targeting the export marketHit Sasini, KTDA launched brands
– Sugar, maize, and wheat importation raises controversy Hit sugar a no brainer, while maize buying from farmers is delayed owing to imported maize in the silos
– Kenya Meat Commission revival stalls whiff off to a good start but Budget ’08 will show if it still needs government support
– Coffee smuggling once again becomes money minter. miss

BANKS & FINANCE:
– A correction in the stock market and equities go into bear mode. Hit
– The local currency strengthens, holding at KSh 60 to the US dollar for the better part of the year.Hit shilling kept getting stronger through the election year against most expectations and hit 61 from 73 a year ago
– Revolutionary money transfer/online banking for Kenyans in the Diaspora. Whiff Safaricom M-Pesa is a local hit, and is being tested international by Vodafone
– Several shareholder groups are formed to revolt against perceived insider trading Whiff though several watchdogs started barking after Francis Thuo collapsed
– Taxpayer groups agitate for better services from the government and presidential candidates. whiff only presidential candidates were put to task over their plans
– Entry of three new mid-size banks precipitates the merger of several smaller banks Miss only one merger, but banks realize that the capital stakes have been raised now
– More banks become stockbrokers Miss Only NIC (and Renaissance Capital) who bought into existing stockbrokers
– The dividend tax is increased while a proposed capital gains tax on shares is defeated. Miss a cap gains tax on real estate was shot down in parliament – one of their few good deeds this year
– VAT is reduced from 16% to 12%. Miss tax reduction is a no go subject
– Executive shuffles in blue chip companies. miss
– Co-operative Bank is listed on the Nairobi Stock Exchange Miss
– Celtel rushes the NSE Missin fact they exited the bond market
Unresolved
Safaricom IPO opens just before the elections. Whiff ???

EDUCATION:
– Free primary education continues to be a shining success Hit all candidates have promised free secondary as well
– Three new universities start offering degree courses. Hit more than three got licensed in the booming higher education sector
– Teachers again draw the government into a salary dispute miss election year government paid them their dues
– JKUAT opts for a new name to reflect its entrepreneurship and technology brand. miss but it should happen right?…

ENVIRONMENT:
– Rivers dry up and Mt. Kenya and Kilimanjaro lose their snow peaks. Miss but ….
– Torrential rains cause mudslides, flooding, and destruction of infrastructure Hit
– A mandatory tree planting policy is reintroduced miss

FOREIGN AFFAIRS:
– Nairobi hosts peace talks on Congo, Somalia, and Sudan. Whiff talks were held in other countries
– Uganda and Rwanda formally complain about infrastructure and bureaucratic delays in Kenya. Whiff only Museveni complained informally
– The US announces the withdrawal of troops from Iraq. Miss

HEALTH: Minister Ngilu’s social medical scheme is revived. Miss though she was fired and now promised that an ODM government will reintroduce it
ENERGY: Significant oil deposits are found in Kenya Miss If Total Man didn’t find oil, is there any?

INFORMATION AND COMMUNICATIONS:
– A second national operator starts operations with a focus on mobile and fixed wireless services in urban areas. Hit France Telkom also gets a wireless license which will be a big part of their offerings
– Work on EASSY submarine cable starts after Kenya gets its way on issues WhiffKenya building her own cable
– Econet finally launches, but there are doubts about its success. Miss shareholder disputes resolved, but no launch
– A project to computerize land title deed registration is launched. misse-government is still only on paper

JUSTICE AND SECURITY:
– Insecurity rises partly because of heightened political activityHit
– Judicial reforms and reformers are in the spotlight Miss
– Kenya gets a female Attorney General. Miss AG entrenched after 17 years in office
– Wealth declarations are leaked Miss though one presidential candidate has release his voluntarily
– Tom Cholmodley Delamere is acquitted. Miss

LOCAL GOVERNMENT:
– Local government under pressure to make it easier for business’ to operate but councils oppose proposals to scrap some licenses. Hit
– The government, recognizing the informal businesses and introduces new licenses, taxes, and building standards for kiosks. Missthough they built markets for ‘hawkers’ and will collect fees
– Nairobi City Council calls for the annexation of Nairobi National Park for urban development and settlement. Missbut the park is not safe

PARLIAMENT:
– Few laws passed as election fever sets in. Hit
– Parliamentarians initiate internal reforms and promise to work harder and for longer hours. Miss wishful thinking

TRADE AND TOURISM:
– Trade with China dramatically increases. Hitthough imports in and investment into Kenya rise much faster than exports
– Kenya records the largest number of tourists in a decade. Hit
– New outsourcing companies are set up. whiff

TRANSPORT:
– Rift Valley Railways operations off to a slow start. Hit companies are complaining, but it’s a Herculean task to revive the railways
– Mbagathi Way is opened. whiffroad in use, but incomplete
– Matatu owners sign a safe-driving pledge with the police commissioner. Miss wishful thinking
– A pothole causes a major road accident, reminding the nation of the cost of bad roads and the need to speed up road repairs.Missthankfully

SPORTS:
– The Mombasa cross-country is a well-managed event, while an equally successful Safari rally is organized as part of the African series, securing the Kenyan event world rally status thereafter.Hitcross country was an internal success thanks to Kenenisa Bekele, but Kenya is not back on the WRC map
– Michael Schumacher resumes racing by joining a minor Formula 1 team in the middle of the 2007 season Miss but he resumed testing for Ferrari and racing in taxi’s
– FIFA promises to have some group games of the 2010 World Cup played In Nairobi Miss

ECONOMY:
– Government borrowing remains stable owing to consistent tax collection and reduced corruption. Hitbut borrowing is creeping upwards
– The public & private sectors hold a forum to agree on a formula for measuring the rate of economic growth. whiff only debate is between political opponents
– The role of donor aid comes under scrutiny as activists question their legitimacy as Kenya’s development partners. whiffonly debate is between political opponents
– A public watchdog heavily censures the expensive lifestyles of NGO bosses., while other crusaders call for Rwanda-style cutbacks on public expenditure especially the use of high cost 4-wheel-drive vehicles by civil servants. Missonly Maina Kiai is at work

REAL ESTATE:
– Kenya endorses a new low-cost housing design of KSh73, 000 ($1,000). Missdevelopments confined to high end housing
– A foreign bank takes over Housing FinanceMissthough local upstart Equity Bank buys 25%
– Water, sewerage, and electricity crises hits NairobiMissthough electricity prices will go up next year as electricity reserves get dangerously low

POLITICS:
– Presidential and parliamentary aspirants range from chief executives to religious leaders and people famed only for their notorietyHit
– Several high profile leaders defect from their political parties, which they perceive as “unelectable”.HitTuju staying strong
– A number of opinion polls, some dubious, are launched but Steadman remains the most accurate forecaster of political events. Hitbut even Steadman is feeling the heat
– One-half of the Artur “brothers” resurfaces in West Africa. Whifflurking in Sri Lanka
– The vice president’s office is expanded assuming greater significance Miss VP often overshadowed by the Justice Minister
– Some forward thinking banks start to finance viable c a n d i d a t e s Miss
Unresolved
– The country holds peaceful general elections. whiff
– True to Kenya’s historical trends, the incumbent carries the day whiff
– A majority of ministers and MP’s lose to savvy challengers looking like a hit

Kutwa Tuesday: December 11

Yesterday was the day the Safaricom IPO was to start, but not a word came except from the courts. The prospectus could be out today, so there could be hope.

Still, the market needs a huge outlet to drain all the excess investment liquidity in the country. So far, everything offered is oversubscribed from company placements IPO’s, to corporate bonds – with the Diaspora, foreign investors, local institutional investors, fund managers, co-operatives, banks and retail investors all chasing the same investments. The latest was the Diamond Trust Bank rights which were oversubscribed by 178%

One controversial issue of Safaricom is the 5 – 10% owned by Mobitelea, which has been extensively discussed in the media and among blogs. However it would be surprising if that shareholding still existed, and surely that embarrassing matter has been sorted out by Vodafone either by swop’s or other payments.

Bank developments

  • Corporate rebranding at KCB at their website (formerly kcb.co.ke) is now kcbbankgroup.com – shedding the Kenyan connotation which would be a burdensome sell in the region with branches in S. Sudan, Tanzania and Uganda.
  • Equity Bank has received more approvals from CBK, NSE and CMA for their recent deals. In addition, Helios (who are buying 25% of the Bank) have been exempted from the banking act provision that a foreign non-bank cannot own shares in the country (until 2016)
  • Imperial Bank has ventured into Shariah banking with a product called Imani while giant Standard Chartered also considering venturing into Islamic banking.
  • The Baraka Fund has taken over the country’s smallest bank – City Finance.

Stockbroking

  • The NSE has announced that they have fully paid all Francis Thuo client claims as at November 30 2007
  • CFC Bank is looking for stock agents in all provinces of the country.
  • NIC Bank’s takeover of Solid Investment stockbrokers has been approved by the Minister of Finance.

Real estate

  • Business Daily looks at real estate investments in the last year and their profitability.
  • Regardless of who wins the election, budget deficits are a sure thing and interest rates should rise in 2008 – affecting mortgages, most of which are not at fixed rates
    New hotels: planned developments include seven coves in chumani kilifim while the Delamere farm will set up ecotourism camp at soysambu ranch

insurance:

  • After insurance companies beat a retreat from insurance sector three years ago, citing fraud and the collapse of medical plans, there’s a mini comeback now with First Assurance going after AAR in a partnership with the Nairobi Hospital Association.
  • The Association of Kenya Insurers (AKI) has announced that from next year all premiums must be paid before any cover is provided

opportunities

Bottle shortage

A sign of changing trends as people seem to have forgotten that they have bottles at home. And now the bottlers want them back and are willing to pay cash for you to scrounge around the houses and surrender their empty bottles.

  • Beer bottles: east African breweries buying them back at 17 shillings ($0.25) per bottle and 335 sh per empty beer crate to uchumi and nakumatt supermarkets. Nakumatt will pay cash while Uchumi will pay in vouchers for shopping at that store!
  • Soda bottles Nairobi Bottlers (a Coca-Cola franchise) is buying coke, fanta, sprite bottles (300 and 500ml) at 10 shillings each, and empty crates at 100 sh.

Awards:

Kenya National Commission on Human Rights 2008 human rights & democracy awards: milele (lifetime achievement), firimbi (whistle blower), umma (public body), utumishi (police), urekebishaji (prisons), utetezi (civil society), mashinani (community based), habari (media), jitolee (business) and special category lochiel@knchr.org or bwire@knchr.org

Africa Investor: Tourism Investor Awards: Tourism Investment Programme of the Year, Sustainable Tourism Investment of the Year, Business Resort of the Year, Best Initiative in Facilitating SME Tourism Investment, Tourism Promotion Agency (TPA) of the Year, Hotel Investment of the Year, Hospitality Management Team of the Year, Tourism Investment Advisor of the Year, Business Airline of the Year, 2010 Legacy Investment of the Year, Business Travel Insurer of the Year. Deadline for the entries is 11 January 2008.

Jobs

from the daily papers last week

  • Chief executive; Constituency Development Fund board
  • Daystar University deputy VC finance, administration & planning. Manpower 14/12
  • CEO at the troubled East African Portland Cement Company
  • Fly 540 airline: looking for captains and first officers for ATR 72, Dash 8, Fokker F27 and BAE 146 aircraft
  • KISS FM: creative writers email gm@kissfm.co.ke
  • K-Rep Bank: branch managers, operations managers, advances managers, advances officers, apply by snail mail – D/L 19/12
  • Kenya Pipeline: helicopter pilot, senior accountant, internal auditor, senior internal auditor, senior IT officer, D/L 21/12, apply by snail mail
  • Financial management analyst at the World Bank – Nairobi