Kenya Commercial Bank held its AGM at KICC on Friday June 17th at KICC. Started sharp at 11 a.m., after registration and handing out of umbrella’s and meal vouchers to shareholders. But there were some timing issues that affected the meeting. After registration, got my gift umbrella

Chairlady?
Susan Mudhune was referred to as Chairman throughout the meeting, without any awkwardness. This must have been an issue before, but not anymore as there’s no discomfort with the term. The Swahili translation of her title is appropriate ambiguous “mwenye kiti” (owner of the Chair) Kenyans will have to confront these issues in future with job titles such as fireman, linesman.

2004 Performance
Mrs, Mudhune introduced the Board and gave a speech on the bank performance and invited Terry Davidson, the Chief Executive who also gave a more added more depth to the operations of the Bank up to December 2004, and how it has performed halfway into 2005, HIV, anti-corruption training etc. They also invited an official of Suntra Investment Bank to explain aspects of the electronic share trading (CDS) However their combined speeches ran for an hour and it was 12 noon by the time the Company Secretary read the notice and formally convened the meeting.
After the company secretary, and recognising some uneasiness, the MC announced that they had plenty of food for all shareholders

During 2004 the Bank’s EPS went from 3.06 shillings per share to 3.94 and share price increase from about 54 in December 03 to 64 in December 04. However the most significant event for KCB (and perhaps the entire banking sector) in 2004, was its successful rights issue in which shareholders were invited and bought new shares in the bank – raising about 2.3 billion shillings for the banks operations, expansion and improve its compliance with banking regulations following heavy provisions and losses a few years ago. Dividend payout was 3%, which was comparable to Kenya Airways 3.3% according to the CEO.

As a result of the hour-long introduction, the Chairman was forced to take only a limited number of shareholder questions, leading to some angry exchanges. Still they led to some vital information coming out. Examples:

– Government will divest from KCB and all banks and parastatals, as it recognizes that its mandate is to provide services. Their 26% share in the Bank will be sold to private people in “the best interests of the Bank.”
– The Bank is hiring a No. 2 or Deputy CEO who will be in charge of strategy, marketing, research, subsidiaries and regional operations. Also KCB has changed from geographic management structure to a functional one and also implemented balanced scorecard and performance management system.
– Kencom house will revert to the Bank following an out of court settlement. As a result of this, the Bank’s pension fund is now in a surplus – and will now consider changing from a defined benefit to a defined contribution system. However this will only affect current staff of the Bank.
– Western Union money transfer is now available at 10 branches, and will be at 36 by year-end.
– The Bank has the largest ATM network in Kenya (87) and will increase to 119 by year-end. The 350,000 Quickserve ATM card users can also use their cards as debit cards at major shopping outlets
– The Bank refurbished 35 branches at a cost of about 500 million and will complete about 45 more. This makes one wonder about Kenya’s Parliament refurbishing one building at a cost of 800 million shillings
– Abandoned a new (and controversial) IT system, and instead upgraded their existing one
– Operating expenses increased by 1 billion – all due to the increased cost of doing business, such as processing 70,000 new loans in 2004.

Ownership
– Government is the largest shareholder of the Bank with 26% (52 million shares) followed by ICDCI (5%) and KCB staff pension (4.55%), and NSSF (3.8). Bank Director Sunil Shah is the largest individual shareholder with 2.3% – from 4.86 million shares. At one dull point of the AGM, I calculated my dividend payment (Kshs. 2,533) and that of Mr. Shah (Kshs. 9,234,224)

Director Elections
It was announced that two sitting directors, William Gitobu and Francis Ojany, would not seek re-election – so there were 4 director seats being contested, by 9 applicants. Election ballot forms not been handed out, and were quickly dished out as candidates spoke stating why they should be elected director. I predict that the new directors will be Joseph Kinyua (Treasury Permanent Secretary), Susan Mudhune (current Chairman) James Koome (ex-UNGA) and Joseph Adongo (ex Kenya Airways) as (I believe) they enjoy the support of the Government (largest shareholder by far) and the other 5 candidates will have no chance despite their passionate speeches. The Bank’s auditor Ernst & Young supervised the election portion of the AGM and results should be out by Tuesday.

Lunch
It was now past 2 p.m. and shareholders stood to deposit ballots in voting boxes, and then immediately proceeded to line up for lunch at the ends of the hall. Despite repeated calls that the meeting was still on and that they should return to their seats, the sight of some shareholders already eating discouraged others from sitting down. IMHO the meeting was over so I took my lunch box (cold roast chicken, potato cuts, bread bun, banana and some fruit and soda – and went back to office, as another representative of Suntra stocks explained more on the CDS.