Reassurance from bankers

The downward trend continued at the stock exchange again this week to Friday. So how about some banking news to reassure nervous investors?

KCB: are first out of the blocks with their third quarter results. Some shareholders might be peeved about having forked over Kshs. 25 a share in the rights issue a few months ago, only to have the share trading at below 20 this week.

How have they performed? Compared to a year ago, assets are up 67% and profit up 66% – which should go on through Q4 of the year, and hopefully the bank will reward patient shareholders with 2/3 increase (or more) in dividends after December. After three quarters, the bank has already passed their full year income mark for 2007, and aggressively loans are up over 50% against just 15% increase in deposits.

Equity: are usually one of the first banks to publish quarterly results, and have been known to run them in the Saturday newspapers, so we’ll see by Monday.

Co-Op: a week to the IPO and the media push is on, though subdued compared to past NSE offers. There’s a pre-prospectus document (PDF) at their site published a few weeks ago. See also analyst Robert Bunyi’s perspectives on the IPO (Hat tip Ratio Magazine)

Safaricom (M-PESA qualifies as a bank!) CEO Michael Joseph does his part to reassure retail investors about their Safaricom share prospects going forward. and regardless of their current price.

Opportunities

most from the Daily Nation
– East African Cables commercial manager hr@eacables.com 13/11
– Econet credit manager see www.Adeptsys.biz by 31/10
– Government of Kenya (Ministry of public service): 112 senior personal secretaries, 126 personals secretaries. D/L is 31/10 to the PS by snail mail
– KCB: head of alternative business channels, manager – trustee services & compliance. 7/11
– KPMG: seeking several public sector & development associates (PSA01/08) apply through talentrecruit@kpmg.co.ke D/L 7/11
– Suntra investment bank: Chief executive (SIB-CEO/10.08) apply through esd@deloitte.co.ke D/L 12/11

from The Economist
– African Agricultural Technology Foundation: Executive Director Nairobi, Kenya
– IUCN: Regional Director for Eastern and Southern Africa Nairobi, Kenya
– KickStart International, Inc: Development Economist / Director of Impact Evaluation & Monitoring Nairobi, Kenya
– Africa Center for Strategic Studies: Associate Dean, Relations Professor Washington, DC
– eRwanda PROJECT: Lead Technical Manager for RCIP-Rwanda Kigali, Rwanda
– Africa University: Vice Chancellor Mutare, Zimbabwe
– Alliance for a Green Africa: Senior Policy Officer, Innovative Financing for Agriculture Nairobi, Kenya
– SNV: Senior Advisor Water, Sanitation and Hygiene -Nanyuki, Kenya
– Call for Paper – First Congress of African Economists

from the mailbox
Free Web, Domain and Blog Hosting in Kenya‏: read more but buyer beware

DiscountStockbrokers.com

Insight to a dot.com stockbroker

Discount Securities web site is still up, with today’s stock prices – its’ even more up-to-do date than other online stockbrokers sites. The site leads off with an announcement of the Restructuring of Discount Securities Limited:

we would wish to notify the public of the following regarding the much-publicized DSL restructuring;
1. That DSL is not under statutory management; KPMG has been appointed to act as executive director in a corporate restructuring strategy.
2. That the stock brokerage operations of DSL shall continue as normal and DSL offices shall remain open.
– We encourage the DSL clients and other stakeholders to stay calm and cooperate with the new executive director

I came across several promotional materials from Discount and an aptly titled blog post about Discount on the folly of running your mouth. It seems Discount spent and spent, and told, but not as much as they spent. They may have thought the Nairobi Stock Exchange bull run would continue forever, the IPO gravy train would never end, as everyone was opening a CDS account for their maid and grandmother to get allocated more IPO shares etc.

Discount had a magazine: I’m not sure how many issues, but I have the January 2008 issue – yes while the country was politicking, they published the January issue of the DSL Explorer with another bold title – Branching Out.

It was full of pictures of smiling staff at the new branch offices of the company. Discount seems to have opened up to 22 branches; they marketed their unique Country-wide Branch Network – and look how many offices they opened in the last two years (as contained in the magazine)

2006
February – Mumias (branch opened)
October – Kisumu
December – Bungoma

2007
January – Mombasa, Nyeri
April – Tom Mboya (NRB), Nakuru, Nyahururu
June – Fedha (NRB), Meru, Nanyuki
July – NHIF (NRB), Thika
September – Naivasha, Embu
November – Eldoret
December – Kitale

They were opening (fully staffed) branches faster than most banks; at a rate that made watchers of Equity, Barclays and Family banks uncomfortable – but those banks had assets, products, strategic plans. But it turns out there may not have been enough customers for these new broker offices/branches.

Mission, Vision, Values: All good companies have them, and Discount did too (they are still there on the website), and all the branches even had individual goals

OUR VISION: To be a leading stockbroker and investment advisor in the East African region, offering exemplary professional advice to both individual and institutional investors.

MISSION STATEMENT: To demystify the issues surrounding the stock market and facilitate accurate and well-researched information to ensure profitable transactions for our clients.

CORE VALUES
D-Discipline- We execute what we promise.
I-Integrity- We adhere to high ethical standards of business conduct.
S-Sustainability- We aim to develop and maintain possibilities that are consistent and long-lasting.
C-Customer Satisfaction- We understand, respect and always put the needs of the customer first.
O-Operational Efficiency- We have a sense of urgency for all our processes and a strong bias for action.
U-Uniqueness- We value each other’s innovative ideas and are always looking for better ways of doing things.
N-Networking- We establish strong relationships with our clients and other stakeholders.
T-Teamwork- we value individual excellence and work as a team for the benefit of the firm.

They sponsored the marathons (Stanchart, Lewa), investor roadshows, golf tournaments (Nakuru, Limuru, Railways, Karen) concerts, women’s forum [even negotiated to advertise at this blog]

Outlook: It seems to have been a wonderful company to work for, but it reminds me of some of the high-flying, short-lived dot.com companies who ran out of cash and eventually crashed.

Discount may have been bigger than Francis Thuo or Nyaga Stockbrokers, and so far, there are not many signs of fraud or rogue-broking on the part of the executives or staff – except for NSSF shares

Maybe if the Co-Op IPO had been rolled out earlier, with Discount as a co-sponsoring broker they would have gained a few more months of business. And perhaps if it’s true, then maybe the CMA/NSE acted in time and that some investors’ money and shares may be found to be intact by the new management.

Mostly Centum

Last week the company CEO departed and the Centum (formerly ICDCI) directors postponed the annual general meeting (AGM) and payment of the year end dividend.

Today’s newspaper has a statement from the Centum Board asserting that:
– The management is firm, the company is on sound financial footing, and the departure of CEO Peter Mwangi had no relation to the delayed dividend and meeting. However, while Tony Wainaina (Mwangi’s predecessor) and Mugo Kibati (EA Cables) may have set a precedent for young CEO’s to enhance corporate performance and value and leave at the top, the timing & coincidence is not good.
– Statement does not address delay of the dividend which would amount to about Kshs. 248 million ($3.3 million). Without doubt, the conpany’s investment portfolio is down this year (quoted investments – which should be easily disposable include about Kshs. 1.5 billion of KCB (but down from 2 billion ), Kshs. 422 m of EABL and probably a healthy slice of Safaricom) – but it’s scary that three months after a company declared a dividend, it would find itself unable to fund it.

Toxic broker:
– Centum’s statement adds that its listed holdings are not accessible to any (rogue) stockbroker, and the company had no dealings with Discount Stockbrokers
– A separate from the CMA statement today effectively states that the company is under receivership by KPMG – owing to corporate governance including poor strategies manifested by an unsustainable expansion plan (branches all over the country)
– A bigger scandal than Discount appears to be at the national Social Security Fund (NSSF) whose dealings with Discount are a lesson for fraudsters.

Best Kenyan corporate site
In the wake of hiding from questions on Discount, the Centum statements along with financial results from listed companies (Kengen, EA Cables and KPLC) have appeared in the newspapers before they were posted on the NSE site. And though the NSE won an African Investor award (for 2nd runner up – most innovative African stock exchange) website updates should be a priority matter

Probably the best bank, and perhaps corporate site in Kenya, with the most relevant, timely, updates has to be the Central Bank of Kenya website with their controversial/pro-active governor Professor Njuguna Ndung’u (and his media team) who post several statements, speeches, policy matters a week (read it and judge)

Co-Op IPO: After a stop-go debate the Co-op Bank IPO has been green-lit and will begin in about a week’s time with investors still digesting refunds and possible losses from the previous IPO – Safaricom.
Dates: October 30 – November 13
Share price Kshs. 9.50 ($0.13) each (for 701 million shares)

Related Posts
– Reasons to invest in Co-op IPO (or not)
– The last Centum AGM (February 2008)
– Saying farewell at AGM’s: in style (Barclays) or in shame (Kenya Airways)

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.

Kenya Bank Charges

The Central Bank released the latest report of a Kenya bank charges survey (PDF)

Notes
– It’s a good read, which may lead account holders to check their statement and shop around for cheaper banks. However many account holders get one or two statements a year at most, so this may not be useful to them
– Also, though some banks score good points for low charges there are other aspects to customer – service to be considered in the choice of where to bank.
– One flaw in the survey is that it assumes that the banking act is applied and that no charges are levied on savings accounts – I’m yet to see a bank that does not
– This years’ survey acknowledged bundled or flat fee accounts such as Move (from NIC) X from (Stanchart), Bouquet (Barclays), and Open (D-Trust)
– Customer who take loans calculated using the flat rate method end up paying more than the reducing balance method
– The final table shows a growing list of bank automated teller machines (ATM) which are being established for customers to use. But if there are 3 ATM’s next to each other at Nakumatt Junction, 3 next to each other at Kenyatta Hospital and 6 at the international arrivals terminal of JKIA, the spread is not very useful.