Top public bank/financial institution gainers in the first half of the year based on changes in share price from January to June, but leaving out 2005 dividend declared and paid.

So buy bank shares, instead of leaving money in the bank earning 2%!

Housing Finance 98.92%
National Bank of Kenya 64.35%
Diamond Trust 61.24%
Jubilee Insurance 50.60%
Kenya Commercial Bank 46.02%
NIC Bank 39.22%
I.C.D.C Investments 37.24%
Standard Chartered 7.91%
Pan Africa Insurance 7.50%
Barclays Bank 2.66%
C.F.C -10.00%

At the end of 2005
Pan Africa Insurance 91.43%
Kenya Commercial 77.27%
Housing Finance 59.20%
National Bank of Kenya 52.41%
Jubilee Insurance 46.12%
Barclays 38.50%
CFC 29.03%
ICDCI 25.83%
Standard Chartered 17.62%
Diamond Trust 12.11%
NIC 6.00%

21 thoughts on “Bankshares

  1. coldtusker

    My opinions (sniff at your own risk)

    Housing Finance – Overdone esp compared to other banks
    National Bank of Kenya – This is a joke unless the govt “wipes” out the bad debts by “buying” them!
    Diamond Trust – High P/E but Aga Khan run
    Jubilee Insurance – High P/E but Aga Khan run
    Kenya Commercial Bank – Can it go higher?
    NIC Bank – No idea
    I.C.D.C Investments – Solid investments but do you trust kirubi?
    Standard Chartered – No idea but well run!
    Pan Africa Insurance – Used to be thuggo (nyammo& aka thammo holdings) & company. Is now run by SA firm. Pricey?
    Barclays Bank – Solid management. Can it grow any bigger?
    C.F.C – No idea esp seems pricey

  2. bankelele

    Coldtusker: Housing Finance – much speulation and interest from Trancentury, Development Bank of Kenya, and possibly, one other multinational bank.
    National Bank of Kenya – Stanbic (SA) have expressed interest
    Diamond Trust – ditto
    Jubilee Insurance – ditto
    Kenya Commercial Bank – so much cash, as their rural reach allows them such cheap deposits
    NIC Bank – MOVE (flat fee) accounts are a hit, as are their asset financing (matatus/other vehicles)
    I.C.D.C Investments – nice portfolio, but who’s in charge?
    Standard Chartered & Barclays – as you say, is there room to grow?
    Pan Africa Insurance – Now SA’n run
    C.F.C – still sorting out the insurance side, but they also need to discover who they want to serve – i.e model customer

  3. coldtusker

    HFCK – In spite of all the interest, will the buyers pay 28/- per share? I agree that it has a brand name BUT paying too much is silly – ask Warren Buffet.

    NBK – No one will buy it UNLESS they get the bad debts taken over by someone else i.e. the government. This sucks for most Kenyans since it would mean a greater tax burden on the taxpayer vs the shareholders. There are other ways to work out the problem which are too complex to discuss in the comments section!

    DTBK + JIC – Apart from price (high P/E) the Aga Khan firms (Nation & TPSEA) are great! All the firms have made shareholders lotsa money esp if you bought into their IPOs. Hmmm… I am sure merali has someone spying on me! I would be very CAREFUL buying shares in a merali company!

    KCB – I think they are overpriced for now BUT great growth prospects esp in rural areas. Expect competition from Equity, Family Finance & a resurgent Co-op Bank.

    NIC – ndegwas but well run. Can’t comment on P/E. Deposits are growing but in an increasingly tough mid-market (same as CFC Bank, I&M Bank, etc)

    ICDCIC – kirubi controlled. Peter Mwangi is MD.

    CFC Bank – Lots of potential. Best integrated financial services firm. Shares too pricey. They need to stick to corporate customers + high net worth clients. Great service. I can’t see a Njonjo firm catering to the hoi polloi!

  4. Fontaine

    Question: are Kenyan bank accounts insured by the government (a la the Federal Deposit Insurance Corporation in the United States)?

  5. bankelele

    Coldtusker: NBK – govt has restructuring & privatization plan for NBK and Consoldiated, including assumption of their governemnt debt & capitalization – may be done by the end of 2006.

    Scangroup looks promising, have to go in with IPO. It’s advertising, but there will be communications companies coming soon to NSE whose growth/profit potential is as risky – and advertising is NOT capital intensive (like ICT companies) and Scangroup expects to pay out 75% of earnings as divdends

    Fontaine: There is a deposit protection fund (DPF) which pays up to 100,000 shillings per account (about $1,370)

  6. Shiroh

    Banks as much as i agree with you, this market is damn speculative. When the Transcentury group pulled out we saw a drop of over 10shs in a week. Were it not the 300M profits they declared immediately, some of us would have been burned. I am actually thinking of disposing them now at 28,i bought at 22.

    I don’t know about what to do with Kengen

  7. bankelele

    Shiroh: Market, is all speculative. I’ll ride HFCK to wherever, since I bought at 13 & believe somebody will eventualy come and scoop them up. As for kengen I’m selling my half share at 38, wnd will leave the rest to the future.

    Jakarumba: I’m not greedy, I’ll take some Kengen profit and transfer it to Scangroup

  8. Jakarumba

    Banks si we meet at business discussion forum. You have very valuable advise.

  9. Speculator

    Kengen, I think that’s a wise move. P/E is 50! Unbelievable… meaning even if they doubled their earnings and the price remained fixed (which is unlikely), P/E would be 25! Which is still high… but this is a speculative market!

    HFCK made a 300% increase in profits… i.e. from 10M to 30M thanks largely to bad debts being written off in the previous year. Nothing has changed operationally to lead to increased earnings. So its going to be tricky without cpital injection. I figure the sh28 price is because of the new management (thought w/o additional capital, they can’t strech the business any more)

    Your comments on all the stocks resonate with me. The caveat is useful!

  10. slim

    Nice insight though still gittery on Scanad according to the prospectus it seems the shares will be sold at a premium.Unlike kengen which were sold at a discount
    Anybody knowing when Equity,Sarova i.P.O.s will be out?

  11. Jakarumba

    Slim, The only other IPOs remaining this year are Kenya-Re & Eveready. Sarova advertised for tenders to construct new hotels but then went silent. Equity is not an IPO as such but just listing at the NSE because its already a public company. They had promised to list at end of June and I wonder how Scangroup overtook them.

  12. aJamaa

    Banking is probably the only sector that has earned reasonably high returns consistently even during the dark age of Kenya’s economy the 90’s. BBK and Stanchart and increasingly KCB are the closest you will come to a sure thing when investing in shares. BBK and Stanchart have had a dividend yield of between 5 and 8% the last 3 or 4 years. As for HFCK and National bank looks like part of the criteria used to assess them is actions by third parties who we do not have control over. Unless you are a speculator you should not buy or hold a share because its rumoured that some knight in shinning armour is going to come and take it over or the government which we all know never to trust is going sort the company out.

    The insurance industry has been very aggressive in the last few years especially on life insurance products which is what Jubilee and Pan Africa focus on. There are definately growth prospects in the industry but at the same time its very competitive. We also have Britak, Old Mutual, CFC Life, and UAP all chasing after the few Kenyans who can not only afford but also consider life insurance a reasonable investment. A guy who bets on the winning horse should earn some reasonable returns.

  13. Kibet

    @speculator- what’s the progress on the HFCK vibe you unleashed on your last post at speculatorhaven? Shld Banks and Shiroh hold on to the HFCK?

  14. Ken

    Housing Finance and NBK are two stocks that have the effect of what Greenspan called ‘Irrational Exuberance’ the prices just keep going upwards but in reality the companies are not moving forward.
    Housing Finance once had a niche market in the mortgage business but I don’t see what leverage they now have.

    Speculation is fine especially if you bought it at 13bob like Banks did but dont expect it to hit three figures unless something big happens.

    NBK ina madeni! Need I say more ? Honestly if you are even banking your cash there you are at risk.
    The government isn’t willing to go after the people who ran it down instead they want to issue a bond to write off the debts.

    Recently Mulei had admitted that the DPF doesnt have the capacity to cater for the mass liquidation of all banks. Infact if all non-performing loans were to be immediately written off, most banks would be declared insolvent.
    The banks debt collection and loan administration systems seem to have failed.
    I have tried to elaborate in a cross post on my blog.

  15. gathinga

    ICDCI has been gaining heavily from 80 last month to 113/= 2day. Looks like something si cooking on this counter. Does Bankelele or anyone else have a clue………please advise

  16. Kudrinketh

    Just finished reading the Scangroup’s Prospectus and there are several things that I like about it:
    1.Presence of founder-CEO Bharat Thakrar and his vast experience in advertising(30 yrs).
    2.Greater proportion of firm’s stock owned by CEO(28.5%)and Adrew White(16.5%),which is locked for at least 3 yrs.
    3.Greater proportion of firm’s stock underwritten(58%).
    4.Market dominance(49%)
    5.The client’s portfolio reads like
    Kenya’s Fortune 500,what with EABL, Coca Cola,Kenya Airways,Unilever,Barklays Bank, just to mention a few.

    Concidering that they are targeting to raise a paltry 721 million, there should be a scramble for these stocks concidering that about 11 billion shillings in refund money from Kengen is still floating around.

    Maybe I’m too optimistic,I’d like to hear any differing opinion.

  17. Ken

    @Gathinga: ICDC got rid of it’s stake in Uchumi and acquired a minority stake in K-Rep bank. They also restructured underperforming associate companies.
    They have lots of investment opportunities but claim that they are capital constrained. They actually prefer a public share issue or a rights issue to sort this out.
    They may also be listing some of the companies in their portfolio.

    Check out their investor briefing:

    @Banks: apologies for turning your blog into a message board.

  18. Jessica

    I’m a university student at Stanford, writing a paper. I wanted to know where you got your original data. Thank you for any help you can provide!

Comments are closed.