Category Archives: bank shares

Bank Tales II

Maina T kind of started this thread with a review of the P/E correction of Nairobi Stock Exchange (NSE) shares.

NSE: ½ full or ½ empty? – to take it further, how are NSE shares today compared to last October? If you considered them fairly priced then, you are frowning today, but if you considered them over-valued, are you smiling today?
– Shares that have appreciated since October 2007: 4% – BAT Scangroup, 3% – Access 3%, 1% – Unga
– Shares that have depreciated since October 2007: (83%) – Mumias (74%) NIC (59%) Nation Media Group, CFC (55%) – Housing Finance, (53%) – Sasini (51%) – Kenya Airways (47%) – Sameer (45%) – Kengen, Centum (44%) – Eveready (43%) – Williamson (42%) – Express, Jubilee (41%) – KPLC, Kenol
– Banking sector: Best (4%) – NBK, worst (-74%) – NIC, sector average is -32%

Interesting that despite the world financial meltdown of late 2008, the Kenyan financial sector is faring no worse than other sectors (agricultural, industrial) which are all down approximately 1/3,and remains the sector most likely to produce super-profits again this year. Best performing sector is commercial services (excluding Safaricom only listed in June 2008) which is down 20% from a year ago

Cheap M&A The depressed NSE prices bring out good and bad banking opportunities.
– Good for anyone speculating on buying into a Kenyan bank. The Helios stake in Equity is priced as almost what it was when the deal was signed, while the CFC/Stanbic merger is worth ½ as much as it was a year ago.
– Bad for the Government who are hoping to raise funds from further sale of NBK and Development Bank of Kenya share. It also raises a question of how Co-op Bank IPO shares will be received i.e. if you enter a train going down hill and you want to go up hill, where will you end up?

Family Bank a recent stockskenya discussion could indicate that a listing of shares could happen soon.

EADB: sad tales on the East African Development Bank.

KCB Rights reloaded

A half year after Diamond Trust , it’s now KCB conducting a second rights issue in the span of a few years. This comes at a time when international banks raising capital are facing more scrutiny than before.

KCB are back to ask their shareholders to chip in. In June 2004 they exceeded the 2.45 billion target and this time they are set to raise 5.54 billion ($86.6 million). How else is this issue different?

What has changed?
Then ; Now
June 04 : June 08
Focus – then Kenyan expansion & rebranding ; now East African expansion, Bank ESOP
New shares 50 million ; 222.1 million [but just 22.1 million in pre-split [PS] 2007 terms]
Price 50/= ; 25/= (actually 250 PS – pre-split 25% discount each time)
Market cap 8.7 billion ; 66.4 billion
2003 PAT 486 m ; 2007 2,974 million
Ratio 1:3 ; 1:9 (1 new share for 9 owned)
Result: oversubscribed; ? (Likely to be the same)

Cost of the offer
Budget:2004 offer – 104 million ; 2008 offer – 220 million
What costs more? : CMA approval fees – up 125% (13.75m), Transaction advisor – up 103% (8.1 million), PR/advertising – up 34% (17.4 m), Printing – up 30% (15 million), Reporting accountant up 26% (3.7m)
What costs less? Legal advisor down 58% (756,000), NSE fees down 50% (250,000)

Market players changed
NSE members 17:19
In Genghis Capital (new stockbroker?), Renaissance Capital, Bob Matthews, NIC (was solid) Afrika Investment (was Ashbhu)
Out: Francis Thuo, Nyagah, Solid, Ashbhu – stockbrokers
Morphed: Faida, Kestrel Standard Suntra (from brokers to investment banks)
IPO financiers: 2004 memorandum mentioned 10 banks and two building societies offering Rights Loans ; this time no mention as share loans are a touchy subject in 2008

Shareholders: Anchor shareholders – then and now : Government of Kenya (35%:26%), NSSF (1%, 7.8%), ICDCI (4.3%, 3.5%), Sunil shah, (2.06%, 2.33%) staff pension fund (4.12%, 2.32%)

Calendar: Record date 4/6, rights start trading 23/6, last day trade rights 11/7, last date to pay for rights 18/7, new share trade 15/8, [to stave dilution, investor accounts will be credited 10 days before new shares are listed]

Investment Decision: Advice on investing in KCB rights comes from the Nairobist newsletter.

Kutwa Tuesday: Capital Chickens

Capital rights issues come home to roost

Last October this post discussed banks’ needing to raise share capital to support their rapid growth over the last five years. Since that time, Diamond Trust, NIC, Housing Finance, Equity and now KCB have all gone ahead and put plans in place to increase their share capital to catch up with their asset base.

KCB hopes to raise Kshs. 5 billion and hopefully this could spur some quality mid-tier banks, with foreign shareholding to step forward to the NSE listing place as well i.e K-Rep, Commercial Bank of Africa, Investment & Mortgages, Fina, Citibank and even Cooperative banks.

corporate news

KQ expands (From African Flyer blog) – Kenya Airways will from mid-year increase flights on routes in Africa (Ethiopia, Nigeria, Ghana), Mid-East (Dubai) and Far East (china, Hong Kong, Thailand)

Another stockbroker falls: This time it’s another small firm – Nyaga stockbrokers. This is not unexpected, as problems were well known for over as year and had even been discussed in a stockskenya forum. The authorities (CMA) can’t pretend to act surprised as they had in the past considered taking action against the firm whose managers repeatedly sold investors shares without their knowledge – and when caught they would blame errors, and take their time correcting the situation, only to repeat the same up to last week.
– Though the NSE launched a 100 million rescue package, a Business Daily story mentions that as much as 820 million could be owed to clients.
Other blogger takes: The KCIG has some suggestions for the capital markets authority while Coldtusker is dismayed by the pattern of bailouts of Nyaga Stockbrokers and Invesco Insurance after financial shenanigans.

OTC Bank shares: Are shares Family Bank available to buy on the over the counter?

New branches: coming soon Gulf Africa bank at Hughes Building – Kenyatta Avenue, and a new Family Bank branch opp. Yaya Center, Kilimani

Big radio opportunity: Kenya’s highest-rated radio show, Kiss FM
Big Breakfast Show (with Carol Mutoko) is looking for a new voice to join her on the show. Send a CV with a recording to

Diamond Trust; Rights Reloaded

Pressure is on for banks to raise capital and Diamond Trust are back to ask their shareholders to chip in. In November 2006 they raised 735 million, and this time they are set to raise 1.6 billion ($24 million)

What has changed
Then ; Now
Nov ’06 ; Nov ‘07
New shares 15.5 million ; 23.3 million
Price 50/= ; 70/= (a 20% discount each time)
Ratio 1:8 ; 1:6 (1 new share for 6 owned)
Result: oversubscribed; ? (Likely to be the same)

cost of the offer
Budget:2006 offer – 41.6 million ; 2007 offer – 54.7 million

What costs more: :
Advertising – up 250% (2.5m)
CMA approval – up 104% (4m)
Placing commission – up 100% (24.5m)
Printing & postage – up 29% (9m)
Registrar & data – up 29% (3m)
Legal fees – up 16% (4m)

Costs less
NSE listing fees – down 436% (0.09m)
Reporting accountant fees – down 200% (2m)
Sponsoring stockbroker fee – down 50% (1.74m)

NSE listing fees (0.5m), PR activities (0.5m)

record date 16/10, rights start trading 2/11, last day trade rights 12/11, last date to pay for rights 27/11, new share trade 11/12, new share certificates 18/12.

Bank Roundup (June 07)

all banks share capital raised from 250 million to 1 billion. At the beginning of the year, 25 of 43 banks were below this mark (with 7 banks below 500 million). This is an update/reversal of an older proposal to lower the share capital when some banks were struggling a few years ago. Not many mergers expected though it may prompt some mid size banks to go for a public listing to raise cash (only 3 banks lost money last year)

Central bank has advertised for some currency destruction contracts as the east African reports on talks for the government to invest in the current currency supplier DE La Rue

Diamond Trust to venture into Islamic Banking

East African Development Bank profit went up by 229% to $4.6 million – up from $1.4 million the year before. Assets increased to $262m dollars and their non-performing portfolio reduced by 11%

Equity bank won an international award – the 2007 global vision in microfinance award. Also KTN reported that the that the bank will open three women only branches in Nairobi

Two month old Family Bank is seeking a new managing director

KCB to expand into Uganda as it also wins an international award – the Africa investor for best performing stock in Africa award (shares price up 97% ) > but the company also held one of the longest dreariest AGM’s in history on Friday

National bank finally got recapitalized. NBK could receive 346 million in 2007 and 2008, a bullet payment in 2009 of 4.3 billion, 220m in 2010 and 2011 and another bullet payment of 5.2 billion in 2012. For 2013 – 2015 123m each and in 2016 a lump sum of 5.2b. 2017 to 2020 58m each and a final payment of 6 billion – for a total of Kshs. 22.48 billion ($340 million)

NIC to increase authorized share capital via a rights issue. The board approved it on June 14, but there was no mention at the AGM on May 16. This follows a Fitch Report indicating that mid-size Kenyan banks need to increase their capital


East African breweries is accepting applications for a graduate management program. Details online and D/L is 22/6

Family bank: chief executive officer, credit manager. Apply through deloitte – by 29/6

Kenital solar : sales & marketing manager, technical manager, engineer sales executives (5) regional managers (4). Apply to by 22/6

Country manager at Steadman Tanzania . Apply to by 22/6

A dozen IT, research and engineering jobs at Safaricom

Writers at a new Swahili newspaper. Apply to

Project management specialist at USAID.apply to

Rhodes scholarships: 2 for Kenyans to pursue full time post graduate study at the University of Oxford. Apply to by 15/9

Real estate: for the monied in the Diaspora, those who have worked hard and are looking to return in style, consider investing in Kihingo village a gated community development in Kitusuru where prices start at $500,000.