Category Archives: shariah banking

Bank waters

In the pool

Diving in: Another West African bank giant UBA follows Ecobank after apparently having secured a banking license to operate in Kenya.

Treading in the shallow end: Still finding their ground are the new Islamic BanksGulf African and First Community that started business last year. They are likely to be the only banks that will record losses of at least Kshs. 200 million each as their new branches and staff continue to reach out and educate customers on a new way to bank.

Had enough swimming?:
(i) Morgan Stanley who were supposed to introduce long term foreign investors to Kenya with a five year window or longer, but instead brought in short term investors at the expense of the Government and othrr investors who took out their profits in a week. Another lesson learnt a long way back from the IPO.
(ii) The Kenyan unit of Citi is on track to rake in profits of $50 million this year on the back of aggresive trading, but will it be enough, or will it be bled off by the parent unit? And who would buy it and its lucrative American interest-linked business portfolio?

Bank Safety Net

and other brief’s

Kenya’s deposit protection fund results are also out. They fund had about Kshs. 18 billion ($240 million) invested in government securities to protect depositors in case one of Kenya’s 45 banks collapses – and pay each account holder up to Kshs. 100,000 (~$1,333). The fund now covers account holders in the two new Shariah banks who were excluded a year ago

Lending crunch? wooing customers
– CFC/Stanbic – win out of the blue; open an account with Kshs. 10,000 and win one of 5 cruises, flat screen TV, digcam, ipods, satellite TV decoders (with subscription)
– Stanchart – take unsecured loan of Kshs. 750,000 or more and get a DVD player
– KCB – spend more than Kshs. 2,500 on your credit cards and you may win a DVD, TV, mobile phones or a holiday

Going regional Equity Bank hiring staff to work in South Sudan, while East African Development Bank is hiring staff to work in Rwanda

Mobile payments Old Mutual customers/fund investors can now pay their monthly subscriptions by M-Pesa – Safaricom’s mobile phone money transfer facility. Banks have already a ceded a significant chunk of the local the money transfer business to mobile phone, who are now expanding into investment and utility payment turf of banks.

Bank Rankings: Final Word

The final word on the banking sector comes from the 2007 bank supervision (PDF) report from the Central Bank of Kenya.

Notes:
– CBK ranks banks using CAMEL (capital adequacy, asset quality, management quality, earnings, and liquidity); 10 banks are strong (down from 13 in 2006), 27 satisfactory, 8 are fair and none were ranked marginal or unsatisfactory. Overall the banking sector totaling 951 billion in assets (~$14 billion)is satisfactory, but with 6 large banks controlling 58% of the industry
– Increase from 575 to 740 branches (293 in Nairobi) in 2007 [all province had increase in branches led by Nairobi (54) and rift valley (46) with only central bank with a decline in branches (-2)]
– Number of deposit accounts increased by 42% to 4.7 million
– Regulatory issues tacked include disaster management, IFRS, Basel II, licensing of shariah banks
– The sector employed 21,657 in 2007 (4727 management, 3865 supervisory, 12,773 clerical, 292 other) up from 15,568 in 2006
– Some of the (97) forex bureaus flout laws such as not recording transactions, money laundering, transfer of ownership, operating parallel hawalla accounts, liquidity
– Coming up: microfinance institutions will be licensed, credit reference bureaus will become operational, capital increases expected

And where are the 4.68 million (deposit) bank accounts kept?

Bank, No. of accounts, (no of branches)
Equity 1,840,332
Cooperative 556,073 (54)
Kenya Commercial 487,667 (135)
Family Finance 465,308
Barclays 428,531 (95)
National Bank of Kenya 233,026 (34)
K-Rep 169,796 (26)
Standard Chartered 131,618 (34)
Housing Finance 45,842 (10)
Stanbic 31,906 (8)
Diamond Trust 29,589 (13)
Others are Consolidated 25,078 (12), CBA 23,657 (17), I&M 22,053 (10), NIC 21,452 (15), Fina 14,446 (7), CFC 12389 (8), Transnational 11,053 (9), and Citibank 2,927 (3)

Kenya Bank Rankings

Kenya’s banks assets and profits at June 30 2008, for the first half of the year
1. Barclays; assets Kshs. 166,702 million [$2.48 billion], (pre-tax profit of Kshs. 4,295 million [$64 million])
2. KCB; 160,230 (profit: 3,394)
3. Standard Chartered; 94,570 (2,321)
4. CFCStanbic; 78,948 (698)
5. Cooperative; 72,018 (1,664)
6. Equity; 70,102 (2,997)
7. Citibank Kenya; 59,495 (1,694)
8. Commercial Bank of Africa 44,035 (847)
9. National Bank of Kenya 43,360 (902)
10. NIC; 37,590 (650)
11. Diamond Trust; 34,262 (618)
12. Investment & Mortgages (I&M); 32,775 (767)
13. Prime; 17,088 (283)
14. Baroda; 16,070 (302)
15. Housing Finance; 12,942 (51)
16. Imperial 12,851 (350)
17. Bank of India; 10,960 (311)
18. Ecobank (formerly EABS); 9,474 (66)
19. Family Bank (formerly Family Finance); 9,278 (273)
20. Bank of Africa; 9,036 (76)
21. Fina; 8,729 (65)
22. Chase 8,497 (109)
23. K-Rep; 7,197 (4)
24. ABC 6,126 (82)
25. Habib Zurich; 5,931 (111)
26. Guardian; 5,530 (60)
27. Giro; 5,379 (67)
28. Southern Credit; 5,338 (11)
29. Development Bank (DBK); 5,165 (90)
30. Equatorial; 4,820 (46)
31. Consolidated; 4,228 (8)
32. Victoria; 3,988 (78)
33. Credit; 3,637 (53)
34. Habib Bank; 3,611 (70)
35. Fidelity; 3,590 (29)
36. Transnational; 3,224 (53)
37. Middle East; 3,106 (35)
38. Paramount Universal; 2,584 (22)
39. Gulf African; 2,529 (-138) * #
40. Oriental; 1,809 (26)
41. Dubai; 1,518 (26)
42. City Finance; assets of 522 million [$7.8 million], (profit of 11 [$164,000])
43. First Community — (–) * #
* New bank
# Shariah bank

Same time last year had Barclays, KCB, StanChart as the top three, Co-op ahead of CFC, NBK wer 6th, CBA ahead of Citi, and Equity were 9th

Something to Do

1. Donate

Through Mama Mikes and a bloggers for Kenya initiative.

There are also other other initiatives – like Save-A-Life, Kiss FM’s Jaza Lorry, the Nairobi Women’s Hospital, but beware of a revival of some NGO’s and unusual causes

2. Report Violence
Ushaidi.com is a tool for people who witness acts of violence in Kenya in these post-election times. You can report the incident that you have seen, and it will appear on a map-based view for others to see.

(3) Become a better tipper
Or, better yet, start tipping – because in Nairobi, tipping is something that we have left to tourists only.

Kenyans are woefully underpaid especially out security forces (some of whom had not been paid salaries even as they were asked to quell post-election violence) and yet they also guard our houses, million shillings cars, look after our families, serve us meals they can never afford, and never ask for more.

Many of them live in the very areas that relief initiatives are being formulated for – but just because they are not visibly suffering does not mean they don’t need our help. And while many of us are at the mercy of people whose ability to take our money we can’t say NO to (taxman, church, landlord, relatives), we need to spare a moment for those less fortunate who we interact with everyday, who also have lives and families, and are more at risk after working a full day. Yet we dismiss them so quickly, if they ask or dare to look like they are about to ask for help while at work.

So even if it means paying less tax or tithe, or having one less beer in order to spread some wealth around, get to know these people better and tip them well; waiters, maids, taxi drivers, bank clerks, and especially policemen – though how this can be done without being seen as bribing them – is a delicate task to accomplish.

Banking briefs

– Kenya’s leading bank, Barclays, is the first to acknowledge a distressed loans problem resulting from the post-election violence and standoff.

– From IHI blog; tired of bank charges? Consider a shariah account since they won’t incur frivolous charges that build bank profits.

Paper banks : Is the Nigerian banking model, which Kenya is going to emulate with increased share capital and consolidations, built on sand and bilking shareholders?

Other observations
– China speaks on the Kenyan political crisis blaming the west for imposing democracy on Africa.
Mobile phone wars continue with Celtel shockingly low rates, while market leader Safaricom won’t compromise and keeps making money
– Hawkers who expected to be evicted from downtown Nairobi, on December 28, now enjoying continuing business with the political uncertainty in the air
– It’s not quite as staggering as Marion Jones or BALCO scandals, but from this month on a whole bunch of expensive, long hitting, golf equipment, widely used in Kenya,(including some Callaway, Titleist and TaylorMade), are now illegal. If caught using them you will be disqualified from a tournament or match event.
– Rapidly growing and expanding Fly540 airline taking a dig at Kenya Airways – with an advertisement that their propeller powered aircraft (ATR72) are more environment friendly than KQ’s jets
– Advertisers taking down the politician billboards that littered the city
– As fuel prices pass the 90 shillings a litre, will some petrol pumps in the country be able to process the sale prices over 100 per litre (3-digits) which are around the corner?
– Where’s the prophetic prophetic Mutahi Ngunyi gone to?

Opportunities

Kenya Airways: Head Of Marketing & Corporate Communications, In-flight Performance Manager, Load Control Officer, Head Of Is Development (IS) , Systems Administrator, Training Officer – Fares & Ticketing, Qualified Pilots, Multilingual In-Flight Attendant, Customer Service Agent
– Sales positions at KCB. download form here.
– Director of research at the Mo Ibrahim Foundation. D/L is 31/1