Category Archives: Ecobank

Pan African Banking

Part II of Ecobank 2010 AGM
After the Ecobank  AGM in Nairobi on June 11 for shareholders only, there was a media briefing after with Arnold Ekpe – Group CEO, Kolapo Lawson- Group Chairman, Tony Okpanachi – Managing Director: Kenya and the Executive Directors of Ecobank.

At the brief were journalists from several African countries including Ghana Nigeria Rwanda Uganda Zambia, Kenya and various media houses including allafrica asking questions of members of the board, mainly answered by the chairman and the managing director. Questions were asked in English and French and the (multi-lingual) directors answered each in the language asked, with the CEO summing in English sometimes. A lot of the same information given to the press was also disclosed to shareholders during the AGM, and at some point the CEO asked business journalists to read the actual full annual reports, not just the abridged versions, as a lot of the answers were there.

Media Q&A excerpts
Explain African strategy especially in war torn countries?
They serve African countries and African countries always have needs for financial services. E. g. democratic republic of Congo (DRC) can be Africa’s richest country, it needs financial services and Ecobank has invested about $30 million there in telecommunications and small  & medium enterprises (SME’s) there. They understand the risks they face such as non-payment of loans  and mitigate those risks. Also wars can’t last forever, and they saw this in Liberia where they were the only bank that remained during the wartime  and are now the largest bank in the country.
– Also they plan to be a world-class Pan African bank. They devote 1% of their after tax foundation to an Ecobank Foundation that has helped a lot of young entrepreneurs and they are the leading micro-finance bank in Africa have MFI subsidiaries, in additional to commercial banks, in Nigeria, Sierra Leone, Cameroon etc. they have also lent between $500 million to $1 billion to other micro-finance institutions
In answer to other questions, they said no, they don’t have a sector specific strategy; – they look at all risk & return opportunities, and also they are not really into agriculture, though by extension their micro finance arms are.
– Asked about 38% decline in profit attributed to Nigeria banking problems: Ecobank’s exposure in Nigeria is 30% compared to the rest of Africa, which is 70%. they are competitive in Nigeria and going forward they see markets like east Africa, and southern Africa (notably Angola), as being more important over time to an extent that problems in one market (country) should not adversely affect the bank’s bottom line.
What is unique about Ecobank? (asked by Zambian journalist who noted that they and  other banks had invested in Zambia at the height of the global economic crisis?)

They are present in more African countries (29) than any other bank in Africa : from Zambia one can transfer cash within Ecobank to 28 other countries and a customer can use an Ecobank cars in al their 29 African countries, including south Africa during the world cup and access to thousand of ATM machines.

Another question was asked (in French) and from the answer it seems to be about delays in Rapidtransfer (through which one can send cash to 29 African countries within 24 hours) they answered that, they have to comply with anti-money laundering/fraud verification, and they use text message for the transfers, and if recipient is not available, the money s refunded to the sender. CEO said there are more African in the African Diaspora, than outside Africa and the they transfer a lot of money which is what Ecobank is facilitating, noting that the volume of rapidtransfer had trebled in 3 months
– The genesis of the bank was in a private sector attempt to facilitate regional trade in the ECOWAS (economic community of west African states) region. To this day they try and facilitate regional trade within Africa, among African countries ; in east Africa regional trade is ‘high’ at 20 %, west Africa its 10%, central Africa its 2% – Compared to Europe 60%. The bank enables business people to trade across countries instantly, and in east Africa when the EAC protocol takes of on July 1 2010 they will be the only bank with such a presence in the five east African community countries.

Fund raising plan:of the $3 billion targeted in a right issue they managed to raise $778 million. They had earlier discussed with shareholders and plan to raise another $500 million this year and more when conditions improve.

Will they cross-list in Kenya?: They mentioned the need to build a critical mass of shareholders as they have just about 800 shareholders in Eastern and Southern Africa. Answering a similar question later, they said cross-listing had to make business sense and there   needs to be ample liquidity in terms of many shareholders trading a lot of shares. Their investor relations (IR) people are watching and will advise them on the way forward

Investment in Kenya: Has been about $40 million in two years. The bank they bought (EABS) had 8 branches, they are now at 19 with another three scheduled to be added this year
Why staff numbers are down: overall, in last few years, staff numbers have been on the increase going from 3,000 to over 11,000, but they shed some staff numbers in 2009 from rationalization and efficiency programs

Ecobank 2010 AGM

Ecobank, a Togolese based banking conglomerate, makes history today by having its 22nd annual shareholders general meeting, not in Togo or Accra where it is listed, but in Kenya. Why Kenya? While it has a presence in over 30 African countries, in 2008 they completed a buyout of a homegrown financial institution that was known as the East African Building Society, and which is now known as Ecobank Kenya from which they will base their ambitious regional plans.

As with exposure to Ugandan investment sector, Ecobank brings an awareness of practices of and levels of disclosure for Kenyan companies that have engaged in cross-listing on exchanges in Uganda and Tanzania.

• Looking at the AGM notice for Ecobank which has 180,000 shareholders, it encourages shareholders to sign their proxies and vote even if they don’t plan to attend the AGM, with for/against/abstain boxes to tick.
• Notice figures are quoted in US$ [profit of $62.9 million and a dividend of $29.7 million equivalent to $0.3 per share]. [At the end of 2009, Ecobank has assets of $9 billion, while in Kenya it was the 19th largest bank by the same measure with assets of Kshs 13.95 billion, ($186 million) and made a loss of Kshs 1.15 billion ($15 million) after making heavy provisions in a one time effort to clean up their old loan book]
• Approval of director’s remuneration is something glossed over in Kenya and approved without scrutiny or numbers disclosed, perhaps referred to in the footnotes. Ecobank lists the packages availed to directors that are being voted on [Chairman $50,000, other board members $30,000 and all get two first class air tickets to Europe]
• There is follow-up to previous shareholder resolutions: It notes that shareholders had approved capital to be raised by $3 billion, by a rights issue – but that so far only $778 million has been raised and (the meeting) asks shareholders to re-affirm the decision and to allow the board to continue to raise funds by various means.
• Audit firm of Pricewaterhousecoopers (PWC) is re-appointed as joint auditors comprising teams from PWC Ivory Coast and PWC Nigeria.
• Directors being co-opted to the board have their (extensive) CV’s – two in this case, and both are under 50 years.

Pepsi to Kenya?

. Nairumour that after an absence of many years, Pepsi will re-enter the Kenyan market in the near future to resume battle with Coca Cola, possibly through their South African partners. If so, it will cap a great year for investment to the country, and that despite 2008 being a relatively tough year for investors and companies, with the post-election violence, business disruption, high fuel and energy prices, depressed consumer spending, P & P madness (pirates and politicians) collapsing stockbrokers, there was a steady flow of new investments and new products that happened this year.

Re-cap of some notable ones

Banking
– Takeovers concluded – Ecobank take over of EABS, and Stanbic merger with CFC (now CFCStanbic)
– UBA licensed (2009)
– Gulf African and First Community (Shariah banking kicks off)

Beverages
– Summit Lager a new beer from Keroche Industries
– East African Breweries launched Alvaro (malted soft drink)
Coca Cola launched Novidia (another malted soft drink) and also started selling Minute maid
– KETEPA launched Safari Iced Tea

Communications
– WPP buys into Scangroup
– 2008 saw the launch of two new mobile operators – Orange (France Telkom) and Yu (Essar/Econet) to battle Safaricom and a re-energized Zain
– Altech buys into KDN
– A long-running fight over one(EASSY)submarine cable, gave birth to three different ones being laid to Mombasa
– Wananchi launched Zuku (TV, Broadband, Phone)

Transport, Energy & Manufacturing
– Tiger brands buying into Haco
– An investment in the Kenya Oil Refinery at Mombasa was still under battle between Libyan and Indian Investors
– Jinchuan (China) to bail out Tiomin?
– Mirambo and PD Toll to salvage the Rift Valley Railways
– Delta Airlines (USA – but postponed to 2009)
– Air Arabia started flights to Kenya

Tourism
– Libyans took over the Grand (Laico) Regency
The Tribe opens.

Exits
– Chevron (Caltex) sold out – bought by Total
– Unilever (de-listing from the NSE)
– Roy Puffet from rift Valley Railways

Facing South and West

With the NSE under water, even lower than the post-election period, it may be time to look West and South for investment ideas. Not too far West, where the US where the financial tsunami is still warming up (threatening to take down Lehman and AIG today), or too far South where it will take some adjusting to Zuma time.

Here there’s some previously unthinkable debate about postponing the Coop Bank IPO and how low the fundamentaly sound (PDF) Safaricom (could) be by the December holiday period.

What’s in store in the rest of Africa?

Kenya: Unilever shareholders have till October 6 to decide if they want to get paid de-list the company.

Togo: According to the Business daily Kenyans may be able to invest in Ecobanks’ rights issue to raise $1 billion. 5 new shares can be bought for every 9 held at $0.29 (~Kshs. 20) per share, minimum 500 shares, and closes October 3

Malawi The Real Insurance Company of Malawi offering of 77.5 million shares at kwacha 2.30 (~Kshs. 1.15) per share, closes on September 19

Botswana The Funeral Services Group offering of 36 million shares at P1.00 (~Kshs. 10) per share. Closes September 22

Insular Tanzania continues to lock out foreign, deliberately including East African, investors from their market, so no thanks!

More at africanshareholder.com

Plane truth

[image: KQ 777]

Embattled Kenya Airways who are facing local strike threat and customer service issues were ranked No. 93 in Top 100 Airline survey; how did they fare against their regional peers in terms of passengers carried and revenue (euros)?

Airline, passengers carried, revenue in millions of euros
12. Emirates, 21.2 million passengers, EUR 6,801 million
27. Virgin Atlantic —
41. South African, 7.5 million pax, EUR 2,184 million
73. Egyptair 5.7 million pax, EUR 1,166 million
90. Ethiopian 2.29 million pax, EUR 583 million
93. Kenya Airways 2.8 million passengers, EUR 611 million

Kenya Bank Rankings: June 08 Briefs

ABC; assets up 16%, deposits 17 and loan 7%, income is up 12% but expenses up 17% with no growth in 2008. Too early to tell about kisima at this indigenous bank>
Bank of Africa : deposits up 20% and loan 34%, income 51% with expenses up 41% but NPA also up 59%. French bank, quiet style, but making more marketing efforts to shore up size.
Barclays: assets up 22%, profit 21%, deposits 22% and loans up 30%. Income is up 35% from a year ago but expenses up 45%. In 2008, deposits are up 18% but loans up 1% – change of direction? Did not actively participate in Safaricom, and this big bank everyone (unfairly) watches to see how they react to Equity Bank
Baroda: profit up 31% deposits 9%, and loans up (staggering for them) 57%, in 2008, both income and expenses are up 29%, and though deposits are flat, loans are up 25% – no longer playing safe
Chase: asset up 76% deposits 58% and loan 88%. Income is up 48% but expenses up 75% and NPA 86%. in 08 loans up 29% and deposits up 51% at this fast growing local bank which has now ventured into stockbrokerage as Gencap
Citibank: assets up 65% and profit up 74%. 2008 looking even better as income is up 49% compared to just 7% in expenses, and remains immune (and insignificant) to parent turmoil
City Finance: assets up 2% , deposits up 12% strategy shifting with shifting bank with loans down 59% government securities and placements up by higher margin from a year ago. Just 8 million in staff costs in six months?
Commercial Bank of Africa: (CBA) assets and profit up 21% loans up 52%, and income up 23% compared to expenses 26%. Increased lending in 08 with 36% loan growth since December. Blue chip bank adjusting to the times, quietly did Safaricom IPO and dabbles in insurance
Consolidated: assets up 6% deposits 24% and loans 36% – with income and exp up 10%. Up for sale, can’t list so likely to be sold privately, and hopefully without controversy
Cooperative (Co-op) : asset up 23% profit 51% loan 44%, and NPA down 54% but insider lending up 40% from a year ago. IPO set for October 20 this year – but has it cleaned up enough legacy bad debt?
Credit: asset up 23% profit up 36% deposits up 25% and loans 44%
Development bank of Kenya (DBK) – assets up 33% deposits up 41% and loans 53%. The
Development financier is up for sale by the Government (ICDC)
Diamond Trust: asset up 40% deposits 37% loan 34%, income up 45% but expense up 64% as bank continues its expansion in Kenya, Uganda Tanzania and Burundi (every other bank says Rwanda)
Dubai Bank asset up 5% deposits 8% income 18% expenses up 13%, somehow translating to profit rise of 85%
Ecobank (formerly EABS) assets and deposits up 4%. Income up 34% and expenses up 10%. The parent Ecobank is currently raising $2.5 billion, (equivalent to Barclays Kenya assets) – showing how far Kenyans banks have to go in the big leagues
Equatorial: assets up 26% deposits 29% , income 21% but expenses up 31%, with no growth in 08
Equity 100% growth in assets loans and profits, and 78% in loans. Income up 140%, with expenses up 106% from a year ago. How long can this exponential growth go on?
Family bank : assets up 39% deposits 23% loan 52%, but income has tripled as have expenses at ‘Equity Blue’
Fidelity: asset up 29% deposits 36% loans 40%
Fina: Assets up 13%, deposits 14% and loan 32%. Income up 26% but expenses up 47% leading to a 24% lower profit. Many banks encroaching on the turf they created in Rwanda
Giro: assets up 1%, , deposits flat but loans up 10% , income up 26% with expenses up 10% – also leading to a surprising 86% profit surge
Guardian: assets and deposits up 11%. Income up 37% with expenses up just 26% leading to a profit surge of 76%
Habib AG Zurich: assets up 10% profit 22% deposits 13% and loans 31%
Habib Bank: assets up 4% from year ago, but no growth in 2008
Housing finance: asset up 34% deposits up 15% and loans up 27%. But profit down 20% (income up 1% while expense up 5%). in 08 deposits are up 5% and loans up 15%. Raised new funds from shareholders and will expect a boost from Equity Bank as anchor shareholder
Imperial; assets up 16%, deposits and loans up 22%. One bank reputed to have the fewest customers, but massive profits from them
(Bank of) India: asset and loans up 15%, with profit up 35%
I&M: asset and loans up 33%, income up 25% as expenses up 16%. Shareholders funds up 60% from new investors and the bank is opening new urban branches
KCB: assets up 66%, and deposits up 20%. Profits are up 77% (income up 50% with expenses up 38%) from a year ago. New funds raised, going regional in eastern Africa and will be cross-listed as well.
K-Rep: assets up 13%, deposits 15 % loans 10%. Income up 12% but expenses up 33% leading to a sharp drop in profit
Middle East: income up 15% and expenses up 33%
National Bank of Kenya assets up 3%, deposits and loans virtually unchanged, but income up 16% as expenses up just 4% leading to a surge in profit of 46% . government shareholding is up for sale
NIC: asset up 37% deposits 31% and loans 39%. Profits are up 38%, as income is up 26% with expenses up 17%. Expanding their stockbrokerage operation, and also opening new branches,
Oriental: assts up 12% deposits up 32% and loans 16%
Paramount Universal: assets up 13% with deposits and loans up 17% at one of the smallest banks
Prime Bank: super growth, with asset up 59%, deposits 57%, loans 66%. Income up 56% with expenses up 30% leading to a surge in profit up 98%
Southern Credit; assets up 9%, deposits and loans up 10% – but income is up 14% with expenses up 31%
Standard Chartered; sleeping giant – assets up 2% profit 1% deposits down 2%, but loan up 15%. Income up 6% but expenses up 10% from a year ago
Transnational: assets up 19% profits 16% deposits 23% and loans 19%
Victoria: flat, assets down 2%. Deposits are down 34% as loan up 18% – and income is up 18% but expenses are up 58%