Category Archives: Stanbic

Shares Portfolio August 2010

Market picking up steadily since last quarterly review in May 2010

The stable
Diamond Trust ↑
Kenya Airways ↓
KCB ↓
Kenol ↓
Safaricom
Scangroup ↑
Stanbic (Uganda) ↓
Uchumi ↔

Review:
– Best performer: Scangroup Safaricom up 25% this quarter
– Worst performer Kenya Airways down 10%
– In: Kenol
– Out: None
– Increase None
– Decrease None
– Unexpected gains/losses: None

Events & Outlook:
– Performance: The Portfolio is up 8% in the last three months while the NSE Index is up 10%.
– Got dividends from all the banks, which are improved performance this year. Dividend included that from Stanbic Uganda but its still a problems to cash as Stanbic Kenya is incapable of partnering with Stanbic Uganda to ease the encashment process – even better would be for Stanbic Kenya though CSFS to facilitate more share buying perhaps reinvestment of dividends to buy more Stanbic UG shares
– Sat out the KCB rights issues whose results came out today (August 10). The Bank had set out to raise Kshs 15 billion ($189 million) from shareholders but yielded 83% of that – 12.45 billion
– Scangroup’s investment in Ogilvy Africa
– Kenol rebounded from problems at battle with government to report some much improved first half profits.
– Looking forward to buying Safaricom shares, and attending their (no SWAG) AGM
– Uchumi is yet to re-list despite exiting their receivership phase

KQ leased 737 from KLM

– Privatization: The Kenya Government is short on cash but their privatization basket is still empty. Nothing has come yet from National bank and East African Portland cement, while the next infusion of cash is likely to be from Kenya Power & Lighting Company. Meanwhile the Kenya government bond market has been much more active than the equity one.

CFC Stanbic 2010 AGM

The CFC Stanbic Holdings annual general meeting (AGM) for 2010 was held on May 21 at the tented parking at CFC Centre, off Museum Hill, Nairobi. (twitter @Standardbankgrp)

The Managing Director re-capped the year’s performance of the group companies. CFC Stanbic (bank) had a flat profit of 1.9 billion [$25 million], CFC financial services (stockbroker) lost 108 million [-$1.4m], CFC Life (insurance) lost 433 million [-$5.6m] while Heritage (insurance) had a profit of 278 million [$3.6m]. He attributed the performance to impairment of the stock portfolio at the Nairobi stock exchange which declined by 60%, increased operating costs (New IT system, write-off old IT system, opening of new branches, and refurbishing/rebranding of all other branches) overall operating income was up 25% in 2009, but operating costs went up 46%. Finally, he added that the first quarter of 2010 has seen a good performance – with good earnings from forex and government securities, and the NSE rebound had been good for their portfolio this year

Hot Button Issue: Poor performance of the Group /companies was cause for concern among several shareholders who asked questions citing:

  • High operating expenses of 6 billion.
  • Item of ‘other expenses totaling 3.4 billion ($45 million) that were not detailed in the notes.
  • Ill-feeling, that when they approved the CFC Stanbic merger they were told that the group would have a leaner management structure would lead to cost savings across the group, and this has not happened.
  • The company used to be generous & give bonuses, but looking at the results, this is not going to happen anytime soon!

In reply, the Board referred back to the MD’s earlier statement that had broken down the major cost items as well as the decline in the company’s NSE portfolio that had resulted in their auditors asking that they factor in an impairment provision of about 700 million while the others were the IT costs, advertising/branding branch refurbishment across the group, not just bank business.

Why new borrowing?: a corporate bond of 2.5 billion [$32.5m] was asked about. Notes also show (an) increase loan from IFC of 759 million and new loans from other banks – NIC (200m) and CBA (500m). MD said the bond and loans were to support their mortgage business, which has been one of their better performing lines and also support their subordinate capital position (500m).

Banking sector fraud is high even as the group invests in a new system and new products like electronic banking, there is a lot of fraud in the sector with customers losing their money to bank insiders, and are Kenyan laws keeping up with new fraudsters. MD replied that the new system was safer.

Long-serving Chairman Exits: During director elections, the chairman Charles Njonjo announced that Mike Du Toit (long time Stanbic K MD), Titus Naikuni (MD of Kenya Airways) and himself who were all up for re-election were all stepping down, but added that Du Toit would take up other responsibilities within the group. On his part he thanked shareholders for their support through the years and said he was proud that the company that he, Jeremiah Kiereini (fellow powerful director), and PK Jani had started many years ago had grown into a conglomerate which now had undergone many recent changes and there were many new faces (and more women) who did not know his face, He said Kiereini, who will remain on the board for a few more years, would look after his interests but that he would still be around next year, as a shareholder on the floor, to ask questions of the board. Re-elected directors were Eddy Njoroge (Kengen MD), Fred Ojiambo (Nairobi lawyer), Jane Babsa-Nzibo and Greg Brackenridge who will be the new Bank CEO?

Bonus at next meeting: an extraordinary general meeting of shareholders will be called later in the year to approve the hiving off of the insurance business (CFC Life and Heritage) into a new company (in a deal with Liberty Holdings & African Liaison Consultants) that will also be listed on the Nairobi Stock Exchange. Current CFCStanbic shareholders will receive a dividend in specie of 1 share of the new company for every 1 CFC share they currently hold, at no additional cost.

Goodies: – lunch box (flat rice & chicken piece), soda, umbrella (which I lost an hour later)
– Scary? The annual report was 114 pages long without a single picture or CSR fluff page. Shareholders also, after several questions, approved a motion allowing the company to publish accounts in the newspapers, have it on their website or e-mail it to shareholders in lieu of having to print and mail one to every shareholder.

Kutwa Tuesday: July 8 Briefs

away from the Grand Regency

Banking
– CFC/Stanbic merger/takeover formalized: As at June 1, the combined banking groups had assets of 78.3 billion shillings [$1.26 billion], deposits of 55 billion [$888 m] and loans of 38.9 billion [$627m]
– EABS Bank is now Ecobank Kenya
– Business Cubs: Bank of Africa will launch a small business Club for clients.
– Going international: building on the success of Safaricom’s M-Pesa, Vodafone will do money transfer between UK and Kenya challenging western union on phone transfers to India, Turkey, Egypt and South Africa (from Balancing Act Africa)

Investments
– Everyone lovers Safaricom; with 90% of the shares volumes since listing, the company has been added to the AIG index, NSE 20 and NASI indexes from July 1
– One month after Safaricom allocations, and despite paying an extra fee (30/= for a CDS statement) and making several trades, no new CDS statement has come in the mail

Media
– KTN joins the morning show club with Sunrise Live – coming a few months after Citizen TV and Nation (NTV) with their ‘breakfast shows’
– There’s a new relaunched Standard newspaper out today with new layout – but their byline For Fairness, Justice, and Prosperity is straight out of Superman

Energy
– Sweden/China joint oil search: Lundin Kenya has bought a share of the field assigned to China [Block 9, Kenya].

Travel
– Having moved to cut out travel agents, Kenya Airways will next offer hotel and car booking online at their website
– Rift Valley Railways (RVR) will raise freight charges up 14.5% and will charge a fuel surcharge based on average diesel cost and US$ exchange rate from 1st august

Other
– Kenya has no summer or winter, but the high court has a summer vacation from 1st to 8th August

Questions from the blogs
– A recap of the Kenya Re AGM
– Has tourism in the Mara recovered in 2008?
– Does EDGE or 3G after all?

Opportunities

Digital: KDN and the ICT Kenya Digital Village are offering free connectivity for digital villages and schools: the program targets rural cyber cafes and schools – who are willing to pay a set- up fee, and share some revenue earned with KDN

Investments
– The Barclays Bond closes tomorrow (9/7)
– KCB rights close on 18/7 – so far only NBK has offered loans for KCB rights (up to 90% finance)

Jobs
– EABL: logistics manager, governance improvement manager, group audit & risk manager, application support analyst, procurement managers (2). Apply to hr.recruitment@eabl.com
– The electoral commission of Kenya: registrar of political parties, internal audit manager, finance officer. D/L is 23/7 by snail mail
– Captains of B1900 C and D at executive turbine. Apply through info@xturbine.co.ke
– Film commission of Kenya: head of programmes, hear of HR & administration, head of finance, Programmes manager, marketing assistant, legal assistant, ICT assistant, executive secretary. Apply to ceo@filmingkenya.com by 18/7
– Keroche: distributors, area sales representatives. Apply to director.marketing@keroche.com by 11/7
– National Oil Corp of Kenya: risk analysts, internal audit assistant, procurement analysts, supply analyst
– Executive director of the privatization commission which became operational in January 2008. Apply (through deloitte) to esd@deloitte.co.ke (22/7)
– Resources manager at the Rockefeller foundation. Apply (though KPMG) to esd@kpmg.co.ke by 11/7

and
Marie Stopes: deputy director of male circumcision project (africa) [location: zambia} and male circumcision partnership deputy project manager [location: zimbabwe] d/l is 19/7

Scholar/internships
– Rhodes Scholarships (2) for Kenyans. D/L is 31/8
– World Bank young professionals program. D/L is 15/7

Kutwa Tuesday: Banking Brief’s (Jan 15)

CFC on hold?
Could the ongoing political crisis be giving Standard Bank of South Africa second thoughts about its approved merger with CFC? A decision by the Reserve Bank in SA to conclude the deal is also overdue.

Dangers of insular banking
Our banking history is littered with the remains of Daima Bank and other indigenous African and Asian banks. Most went down due to malpractices by directors and managers, but also in-lending to close circle or community companies who as a group could be potentially exposed to a singular risk.

The banks also engaged in subtle discriminatory practices like charging outsiders higher rates, frustrating their loan applications or facilities, or making them feel unwelcome – which ultimately proved to be counter productive as locking them out increased the risks that the banks faced by increasing their exposure and dependence on a core group or sector.

Bank Review ’07: Part IV

Finally the big leagues – these banks have large networks of branches and ATM’s in most of the major towns around the country.

6. (No. 13 last year) Equity Bank: Estimated assets of 51 billion ($730 million) and profit of 2.1 billion shillings ($30 million) as Equity continues the staggering 100% annual growth rate it has maintained since it converted from a building society. Took some political and banking industry heat, but was ably defended by authorities and management. The bank also bought out ¼ of Housing Finance and sold 25% a stake to Helios Capital to 11 billion shillings. The Helios deal will be used to finance Equity’s expansion into East & Central Africa as well as the payment to Housing Finance – and with the addition of new directors, Equity needs to sort out some governance and staff morale issues in the new year.

5. (9 and 10 respectivly) CFC Stanbic Bank: Estimated combined bank assets of 64 billion and profits of 2.2 billion resulting from the mega-merger of two mid-size banks – the local arm of Stanbic (Africa’s largest bank) and mid-size CFC with a combined corporate, insurance and stockbroking business. Some clash of cultures and systems can be expected as with most mergers, but this could be a South African – Kenyan partnership that succeeds, where many others have failed.

4. (4) Cooperative Bank: Estimated assets of 70 billion, profits of 2.5 billion in 2007. Another record year for the bank that has recovered massively from a loss five years ago and since the government set out to sort of the cooperatives sector debts. With growth of 15% from a year ago, and profit up 100%, though the MD was rumored to have been keen to move to KCB.

3. (3) Standard Chartered: Estimated assets of 100 billion and profits of 3.5 billion. The quietest of the big three banks in terms of product development & marketing, it lost ground to KCB even as it remains second in market cap. Hawking their products on street corners may have hurt their image, while the corporate banking is plagued by high fees and an operational system difficult to maneuver.

2. (2) KCB: Estimated assets of 110 billion and profits of 4.3 billion in 2007. Had a smooth CEO transition and growth of 20% but with both deposits and loans up 30% from a year ago. But into S. Sudan has been slow, while Uganda was also delayed, showing the difficult of regional banking.

1. (1) Barclays Kenya: Estimated assets of 160 billion ($2.3 billion), profits of 8.5 billion ($120 million) with growth of 25% from a year ago. The bank continued its turnaround, expanding in rural Kenya and other parts of Africa where it had previously withdrawn and closed branches. This is not the first time that it has had to reverse direction – years ago they spun off an unwanted asset finance business that is now NIC Bank – and who they are fighting for dominance of the same market.

who’s missing?
– Charterhouse Bank which is under statutory management by the Central Bank
– Gulf African – new Shariah bank began in 2007, but may be operating under different rules – (see post)
– Kenya Women’s Finance Trust a micro finance organization with assets of about 4 billion and profit of about 200 million that may be the next bank licensed in 2008.