Category Archives: NIC

NIC Bank AGM

The 2007 NIC Bank AGM was held on May 16 2007 at the Intercontinental Hotel

Who’s the man?
The Chairman, Mr. JPM Ndegwa, was able to handle most questions and diffuse tense moments and awkward (not difficult) questions with careful answers and occasional jokes. He kept reminding shareholders to ask serious, not peripheral questions after the first question was – how can the deputy chairman, be older then the chairman? – answer was deputy is not my successor, he only chairs meeting when I’m away

Shareholder questions
AGM’s are quite routine except for shareholder interaction & questions or if there is special business to discuss, or multiple applicants for director seats such as as Kenya Airways or KCB

Dividends:
– Questions (Q) What are unclaimed? What happens to them? Answer (A) – These are cheques yet to be banked, but which NIC has to hold for about 12 in case shareholders or their dependants show up. However after the budget last year, unclaimed dividends will eventually be transferred to the CMA investor compensation fund.
– Earnings per share growing, but dividend per share still a huge way behind. A – Growth in dividends is prudential, NIC can’t pay out 100% of earnings as dividends, and it also has to build up reserves.
– Q; Too many taxes on dividends A – Take it up with the government
– Q; Shareholders without bank accounts have trouble cashing cheques A – Chairman said it’s high time everyone got a bank account, and stop carrying cash around which is dangerous
– Q; shareholder who has bought shares several time gets 3 invitations to AGM and 3 small dividend cheques (and has to pay for each to clear) A – Chairman said he should check that all the shares were immobilized in the same CDS account which should consolidate all the shares
– Q; Why no bonus shares? A – Bonus shares do not increase shareholder wealth, only divide it more times. But it’s popular now, so they may consider it. But for now, if you want more shares, buy more
– Q; Why give t-shirts, don’t want them and want more shares instead A – Chairman answered it was a gift/token of appreciation to those who show up to do the business of the AGM. Added that it was actually a nice pullover, which he would appreciate over the next year (unlike dividend which is only used once)

NPA Q – NPA’s up over the last 5 years, what is the bank doing about them? A – NPA’s are actually down over last 5 years. These are actually prudent provisions by NIC rather than lost money which the bank goes after aggressively. In fact since year end (2006) statement were published and 1st quarter (2007) results published last year, this figure has reduced by another 300 million shillings

Growth plans to sustain profit.? A – New NIC capital division will engage in commercial paper and bond activity which does not require lending. Also careful expansion into new branches. Nakuru branch was opened to support extensive asset finance business in the region. Also new branches at Westlands and the Junction (Dagoretti) are already profitable

Costs Q – Staff costs up significantly but staff numbers relatively unchanged A – new mangers hired to lead the bank into new business. This has been successful as NIC has grown 4 fold in last 5 years. Also union demands have meant bank increase staff salaries

CSR: Q – the bank’s corporate social responsibility (CSR) projects seem to benefit only whites (mzungus as seen by the picture in the annual report A – that is not correct projects benefit all Kenyans. The bank has focused on the environment and education which benefit all Kenyans
Why not support AIDS war? A – Bank has supported Nyumbani Home and has a staff HIV policy but focus this year is on environment and education

Hot button issue
Q – Management of the Bank not representative of Kenya as they all come from one region and the wealth needs to be spread around the country got some generous applause A – This is a company not a political forum. All managers are hired on merit. The CEO position was widely advertised (nationally & internationally) – they got the best man, and the results speak for themselves. Resources (dividends) will go to the areas of people who buy shares in the company got even greater applause

AGM Goodies: NIC half-sweater, Intercontinental lunch box (one rib, chicken drumstick, soda, spring roll, mini pizza, samosa, apple, cake slice)

New investment bank

NIC Bank will launch an investment bank under the banner of NIC Capital to offer financial advisory services.

Earlier: I&M – new custodian.

Reporting director performance

NIC Bank which has been recognized for corporate governance awards for financial reporting has now added a new level of director performance by publishing a scorecard of directors attendance of board and committee meetings during the year.

Director attendance is an important measure of their performance, and contribution to the company. They should also be measured by how many other boards they sit and their other executive commitments to determine if they add value to the company.

2006 Kenya banking review


still Barclays country

based on reported figures for September 2006

1. Barclays Bank of Kenya [assets worth 117.17 billion shillings ($1.67 billion)] In 2006 Barclays made a major policy about turn and announced expansion plans including reopening branches they had closed a few years ago. They also venture into Shariah compliant banking as did KCB, I&M, Dubai and K-Rep banks.

Compared to September 2005, assets were up 10%, deposits 12%, loans 14% but income was up only 6%. They also increased their investment in government securities to about 40% of the loan book. Still despite being Kenya’s largest bank, it also has the 2nd highest return on assets at 4.16% (second only to Equity Bank at 4.74%)Barclays shareholders had a very happy year, which saw them earn a bonus share and a share split in addition to their usual top dividend.

2. Kenya Commercial Bank [84.92 billion] KCB nudged passed Stanchart in assets while its share price zoomed passed though Stanchart still has a higher market cap and better returns. KCB’s expansive rural branch network was the envy of other banks such as Barclays and it also expanded into Sudan in 2006. KCB’s assets were up 18%, deposits 17%, loan 13% while income was up 26% from a year ago

3. Standard Chartered [84.09 billion] The bank launched several new products including accounts aimed as women (Diva) and children and adult savings (Safari) accounts. Stanchart also appointed a new MD – Mr. Etemesi. Assets up 18% deposits 16% loan s22% and income 10% while it also increased its investment in government securities

4. Cooperative Bank [55.17 billion] Co-op’s strong recovery continued and it remains a strong candidate for a listing in the next two years. One of their unique traditional products – kids’ savings accounts – was invaded by other banks this year. Compared to last September, assets were up 12%, deposits up 18%, income up 19%, but loans down by 16%. Also their total non performing assets (NPA’s) doubled to 17 billion while the bank also tripled its in investment in government securities during the year.

5. National Bank of Kenya [39.37 billion] NBK is yet to have its capital and debt restructuring done even though it is promised every year by the Government and despite reporting profits each quarter, it was not able to pay any dividends. The Bank launched a low fee (Taifa) account to counter the crowds flocking to Equity and Co-op banks. Assets and loan were up 10%, deposits and income up 16% and it tripled investment in government securities but NPA have also doubled to from a year ago.

6. Citibank Kenya [35.43 billion] Assets up 12% loans up 42% and income up 33%. Was a late entrant to the share craze providing advisory services to the Mumias rights issue in November.

7. Commercial Bank of Africa [35.12 billion] CBA opened a new headquarters and is expected to venture into stockbroking. Assets, deposits, loans, and income were all up 21% but NPA also up 45% from a year ago.

8. CFC [25.04 billion] Had a successful rights issue to raise capital and also continued to roll out new insurance products. Its stockbroking unit is the largest in the country and was reported to have processed Eveready applications amounts that exceeded the shares being offered. CFC doubled its investment in government securities, assets were up 35%, deposits and loans up 20%, income up 61% but NPA were also up by 74% from the year before.

9. NIC [23.55] Still the leader in asset finance while their flat fee (MOVE) was imitated by other banks. Assets and deposits were up 18%, loans 15%, and income 33%, but NPA’s doubled from a year ago also. Shareholders finally enjoyed some significant price appreciation after being stuck at 50 /= forever.

10. Standard Bank (Stanbic) [23.29 billion] Many Kenyans bought shares in their Ugandan subsidiary while the Bank has expressed an interest in investing in NBK once it is restructured. Stanbic which has the lowest NPA (followed by Citibank and D-Trust) had assets up 54% deposits and loans up 44% and income was up 49%.

11 Investment & Mortgages [21.79 billion] I&M had assets up 25% deposits 27% loans 36% and income up 33% as the bank made a push into the credit card sector.

12 Diamond Trust [19.14 billion] Raised capital in an over-subscribed rights issue in December and is rumored to consolidate with a sister bank next year. Assets were up 27% deposits 29% loans 25% while income was up 33% from a year ago.

13 Equity [16.33 billion] Kenya’s s fastest growing bank had assets up 63% deposits 81% loans 105% and income 90% however expenses in Q3 grew faster than income and NPA’s are up 165%. It has the highest returns (assets 5% and equity 46%) and successfully listed all their shares on the NSE in 2006

14 Bank of Baroda [11.43 billion] Assets and deposits up 29%, loans up 27%, income up 22% and profit could double this year.

15 Housing Finance [9.8 billion] Has a new MD while its share price appreciated beyond expectation leaving it with the highest P/E on the NSE. Assets, deposits, loans, income, and expenses remained basically unchanged from a year ago while the bank has converted cash into government securities. The lack of new loan growth resulted in NPA’s forming a greater portion (72%) of loan book.

16 Prime Bank [9.26 billion] Assets and income up 40%, deposits 43% loan 29% and profits are up 69% from a year ago.

17 EABS Bank [8.55 billion] Teething pains continue as assets shrunk by 4% but with a positive outlook as income increased twice as fast as operating expenses this year, but still NPA’s are at 72%.

18 Imperial [8.47 billion] Assets up 5% loan 146% and securities up 60% as the bank had redeployed about 1 billion in placements. Income is up 13% and Imperial has among the top 5 returns (even better than Citibank)

19 Bank of India [8.15 billion] Assets and deposits up 20%, loans up 56%, income up 46% but NPA up 43% – still the bank is on track for a huge profit this year.

20 Bank of Africa [6.23 billion] Expects to open another Nairobi branch and but into a bank in Uganda to go with the one it invested into in Tanzania. Assets up 17% deposits 35% loans 16% and income up 31% and despite increase expansion costs remains on track to achieve a profit this year.

21 Fina [6.15 billion] One of the banks that has championed SME financing and also has an extensive operation in Rwanda. Assets unchanged from a year ago while loans up 17% profits will be 41% higher, but NPA also up 59%.

22 Habib AG Zurich [5.07 billion] Asset up 9%, loans 16% and income up 11% at this bank which invests primarily in government securities.

23 ABC [4.95 billion] Assets up 7% with loans up 4%, and income up 20% from a year ago however NPA’s also up 46%.

24 Giro [4.93 billion] Nothing much heard from partnership with SBI (India) and
Assets were up 3%, income up 9%, but loans down 13% and profit will be less than 2005.

25 Guardian [4.66 billion] Assets up 2%, and bank has upped its investment in government securities by 61% compared to 2% growth in loans – however NPA up 216% .

26 K-Rep [4.52 billion] One of the banks that pioneered the micro-finance sector now finds itself being crowded out by new entrants advertising all manner of SME packages. It will administer an ADB guaranteed line of credit for women entrepreneurs (along with CFC and CBA). Assets up 31,% deposits 59& and income up 50% proving that micro finance is low risk niche with only 4% NPA’s even as loans by K-Rep increased by 40%.

28 Southern Credit [4.27 billion] Assets up 1% deposits up 6% and loans 9% but with NPA’s up 52% from a year ago at the bank with a major credit card arm.

29 Victoria [4.19 billion] Assets and deposits up 8% and the bank has reduced its NPA’s by 49% and now has the lowest NPA in the country at 1% with 1 billion shilling in the bank.

30 Charterhouse [3.94 billion] The bank was placed under statutory management following money laundering and tax evasion allegations and has fought back through the courts and the press (& with some questionable tactics). Even as depositors are locked out, assets up 19% but profits down 33% and the CBK manager increased investments in government securities – up by 332% (as directed by the law)

31 Equatorial [3.67 billion] A Sameer bank had assets up 1% but reduced government securities by 72% to increase loans by 22% but NPA also up 75%.

32 Middle East [3.45 billion] Assets up 1%, loans up 45%, but deposits down 10% yet bank may increase its profit as a result of an improved NPA positions.

33 Consolidated [3.45 billion] Assets up 29%, deposits & loans up 33% and despite high NPA it may achieve a profit in 2006. The Deposit protection fund is expected to sell its 50% stake in the bank, but without a profitable track record it will remain private.

34 Chase [3.29 billion] Assets up 33%, deposit 53%, loans & income up 43% but NPA also up 42%.

35 Development Bank of Kenya [3.05 billion] Assets up 20%, deposits & loans are up 50% but NPA up 52%.

36 Habib Bank [3.02 billion] Assets, deposit, and loans, all up 4% this year at Habib which is rumored to consolidate with sister bank in 2007. Has the highest ratio of investment in government securities.

37 Credit [2.77 billion] Assets down 6% and NPA up 125% as the bank drops 3 places in rankings.

38 Transnational [2.44 billion] Assets up 12%, while deposits & loans up 20% from a year ago but NPA also up 73%.

39 Fidelity [2.11 billion] Income up 50% while deposits & loans both up 35% from a year ago.

40 Paramount Universal [2.05 billion] Assets up 55%, deposits up 72% but income is flat and NPA’s are significantly up.

41 Oriental (formerly Delphis) [1.37 billion] Losses continue to eat into assets. Growth in income finally faster than growth in expenses but not enough to reverse wipe out of gains in the 1st half of the year as the bank moves further away from profitability and drops behind Paramount in size.

42 Dubai [1.22 billion] One of the first banks to recognize the potential of having a branch in the Eastleigh area now finds itself fighting with new entrants (giants Barclays and KCB) invading the area. Assets up 5%, loans up 12%, deposits up 15%, but NPA up 130% from a year ago.

43 City Finance [0.53 billion] Smallest bank with deposits up 34% (to 130 million), but income down 31% and NPA up 40% from a year ago.

Other institutions
Would be ranked 27 – Family Finance [4.47 billion in assets] Almost as fast growing as Equity with a similarly ambitious expansion plan, but was not able to become a bank since their planned conversion was put on hold by Central Bank. A share capital share of 390 million is more than other existing banks, but new banks are expected to be stronger and so the society went for a controversial private placement which was under-subscribed in November 2006. Assets and profits are up 40% from a year ago while deposits are up 50%.

new bank – Gulf African Will be the first 100% Shariah bank in Kenya

March 1

Banking
After Barclays last week, three other Banks have just published their results and with 30 days to go in the month, daily newspapers will have at least one bank printing their 2005 results each day by the March 31 deadline.

Those who have done well will publish their results in two or more newspapers (for 300,000 per color page) while the few who have performed poorly can get away with publishing the results in the lower circulation Kenya Times or People newspapers.

Kenya Commercial Bank (Ranked No.3 in assets): Barclays posted a 5% return on assets (ROA) and 47% on return on equity (ROE), while KCB had a 1.9 billion pre-tax profit, 3% ROA and 20% ROE in 2005. The Bank will pay a 1st and final dividend of 4 shillings per share to shareholders after their AGM to be held at KICC on June 16.

Even though customer deposits grew from 52b to 60billion shillings during the year, their loan portfolio remained at 33 billion. The Bank also had to restate their 2004 results as their other income was 477 million and not 785 million shillings.

National Industrial Credit Bank (NIC) (No. 8 in assets): The Ndegwa-controlled NIC Bank posted a 403 million profit before tax, 2% ROA and 16% ROE. The bank’s assets stood at 20.6 billion with customer deposits of 16.6 billion and 14.1 billion in loans at the end of the year. Shareholders will be paid a final dividend of 1.8 shillings per share after their AGM on May 17.

Equatorial Bank (No. 29 in assets): The Merali-controlled Equatorial Bank (109 million profit before tax, 3% ROA and 19% ROE) ended the year with 3.7b assets, 3b in deposits and 1.8b of loans.

Credit Bank (No 32 in assets): The Nyachae-controlled Credit Bank (90 million profit before tax, 3% ROA and 19% ROE) ended the year with 2.8b in assets, 2b of customer deposits and 1.7b worth of loans.

Bank Jobs

Kenya’s next bank is expected to be Family Finance which plans to convert from a building society into a Bank by June 2006. With assets of 3.2 billion in June 2005, they will rank as about Bank No. 30 in the country and hired Mr. S. T. Wainaina as their new general manager this week. As such they are hiring;
– Branch managers
– Assistant branch manager
– Branch accountants / supervisors
– Credit officers

Apply by 16 March to the HR manager at info@familyfinance.co.ke. Applicants must be aged 26 – 35 with a business degree and 3 years of relevant experience.

ATM Wars: Pesa Point has put up 80 ATM’s in 4 months, surpassing Kenswitch’s 45 set up over almost 3 years.

Stanbic: Stanbic which plans to acquire some Kenyan banks, has mini-branches at several Uchumi outlets and now offers a finance plan for Uchumi customers to buy household items such as TV’s, washing machines, cookers, fridges, and furniture.

Finance

Sameer: Turnover was flat – a slight increase from 3.27b to 3.36 billion shillings in a year in which the company broke away from the Bridgestone-Firestone company. The change, which entailed increased advertising revenue of the new brands, caused after tax profit to drop from 275m to 205 million. The company’s AGM will be held on March 31 at 11 and a dividend of 0.5 shillings per share has been declared.

Oddly enough, the register for payment of dividends will close on April 5 – after the AGM, not before/on the day of the AGM as is the trend at most companies here. Sameer has also announced that it will cross-list its shares on the Uganda stock exchange.

ICDCI: ICDCI’s six month results showed that investment income increased from 133m to 278m shillings, largely as a result of their off-loading shares in Uchumi. The company also bought 4% of K-Rep Bank in a continuing diversification program.

Coffee industry: The Coffee Board of Kenya launched a new website on February 24. It has up to date results of weekly coffee auctions but some links not working though. Hopefully, this will shine a light on an industry that is booming around the world but collapsing in Kenya (to a point where farmers are uprooting their trees) where it is tightly controlled by an endless cartel of middlemen who shun new ideas (Tetu) and who suffocate and frustrate farmers and new investors.

Future of Giant Parastatals: The Daily Nation looks at the future prospects of Telkom Kenya and the Kenya Power & Lighting Company

Jobs:  The Standard is hiring business executives. Applicants must have business degrees, 1- 3 years work experience, and be aged under than 30. Apply to hrd@eastandard.net by March 8.

Opportunities

– Transport/distribute sodas for Softa bottlers and collect empties nationwide. Email info@kuguru.com
– Manage catering facilities at the UN including quality value menu. E-mail by March 3 to cps.registration@unon.org
– Owing to great international demand, Farmers’ Choice is urgently seeking pigs and paying cash for each delivered for slaughter.