Bank charges survey

The Central Bank and FSD Kenya released a report on bank charges – a summarized version of which is now available from the CBK site.

It is an interesting report based on a survey of several hundred bank customers. CBK used to publish bank charges every quarter in the newspapers from about 2003 to 2005, which were not clearly understood by the public then they appear to have decided to used FSD Kenya to do a more comprehensive analysis.

The report highlights a problem, which many bank customers face. They start a relationship with a bank for one reason, but without knowing all the charges for various others banks services. E.g. it shows that you may take a loan at one bank because of the low-interest rates, but pay a lot more to service the loan, or you may open an account because of the low opening balance or free salary processing, but find it very expensive to do anything else.

Charges form an important part of bank income (the top 5 banks earnings based on commissions were Oriental, EABS, Baroda, Family Finance and Equity who all earned over 50% of their 2007 income from non-interest earnings).

In terms of bank charges, Equity Bank has been very popular for two reasons

(i) They came on to the banking scenes four years ago without any legacy charges; while other banks used to adjust their charges, based on what other banks were charging, Equity were able to set their own charges
(ii) Many of their services (with low charges) are offered to customers and non-customers alike – like 50-shilling banker’s cheques.

I hope the report, and others from FSD Kenya, will be republished in a daily newspaper for the millions of bank customers who don’t have Internet access to review (this is the case in Uganda)

E-government and privacy

Online IPO Registrations I applied online for my Safaricom IPO shares.

There’s the official site for the IPO registration that is very easy to use. Just type in your CDS number and ID number and ID/ passport number (that you used to open the CDS account) to get started ( it’s an indictment for investor education initiatives by the CMA that there are leaders and executives who still don’t know what a CDS account) – and you get all your information like contact information, select your stockbroker, how you want your refunds and dividends to be handled etc.

Some Kenyans may find it unnerving to see their information in an online public database, like having Safaricom know where you are . The Electoral Commission of Kenya (ECK) enabled online verification of vote registration (I checked and confirmed mine online, but it was missing from the voting day roll) in one of the many positive things they did before the election, and the Kenya Revenue Authority (KRA) which utilizes the internet for some clearing & forwarding processes ahs also promised to enable online tax filing and driver license.

Econet hiring Econet mobile has promised to launch services by August 2008, with new partners Essar. They even advertised for some jobs in the Friday paper, something they have done several times before. Hopefully, the company will become operational and the jobs materialize

2007 Kenya Bank Ranking Part III

winners

Asset growth 2006 – 2007
Equity 165%
Family 57%
DBK, City Finance 42%
Diamond Trust 40%
Fidelity 38%
Then K-rep, Barclays, Stanbic, Prime, I&M

Loan growth
Equity 100%
Stanbic 73%
Chase 61%
Family 59%
DBK, Baroda 57%
Then Diamond trust, Barclays, Fidelity, KCB, NIC

Deposit growth
City finance 131% yes but to 231m
Equity 93%
Diamond trust 45%
Transnational 42%
Fidelity 39%
Then Credit, k-rep, Chase, I&M, ABC, Baroda

Profit growth
Habib 1,600 %yes but to 107m
Bank of Africa 159%
EABS 149%
Equity 114%
Fidelity 88%
Then Co-op, Transnational, Bank of India, NBK, Prime, Consolidated, Chase

Losers

No profit City finance (-29m)
Declining profit: Guardian -47%, Giro & Dubai -30%, Fina & Equatorial -22%
Declining deposits: Middle East -19%, Victoria -6%
Declining loans: NBK -70%
Declining assets: Middle East -9%, Victoria -4%
Insider borrowing up 218% at Family, 189% at K-rep, 116% at Consolidated, Stanbic 74%, KCB 55%, while down by 90% at NBK
NPA’s : Up 233% at k-rep, 97% at chase, 59% Dubai, 51% at Equity and 48% at bank of Africa. And NPA’s were down 84% at NBK, 50% at Co-op, 40% at Barclays, 35% Southern credit and 34% at Housing Finance.

Regional IPO Tales

Undugu gani huu?: One of my favorite entertainment sites is Bossip with its catchy headlines, like Making it Rain on These ****, Jesus Take The Wheel, and ** sit down, all of which apply in this case, but the best way to answer this story is BROTHER PLEASE! – while Uganda and Rwanda have joined thousands of Kenyans embracing the investment vehicle that is the Safaricom IPO, it appears the Bank of Tanzania is preventing Tanzanians from buying shares in Safaricom through the Dar es Salaam Stock Exchange. (hat tip RO)

Africa investment resource: africanshareholder.com is a great site to keep up with investment happenings in Africa.

Celtel IPO On: Sadly, not in Kenya, but in Zambia starting at the end of April – with 20% of the local subsidiary on offer.

Executive privilege: one reason that ministerial seats/portfolios are in great demand in Kenya is the power that comes with then such as the authority to insert one’s buddys’ names on state corporation (parastatal) boards and these become law once they run in the weekly Kenya gazette. Sometimes one can even create new boards such as the new Brand Kenya Board which has been formed to market Kenya in the fields of tourism, investment, creditworthiness and international relations.

IPO Tales: 13 days to go

– Oversubscription: If 9 million Kenyans voted last year it’s possible a ¼ of them will buy shares. Or that ½ the people with bank accounts will apply for shares. On that, with two weeks to go, new banks with IPO loans include KCB (Uganda), CFC and even high street CBA.

Happy banks: Two banks may have crossed the 1 billion shilling mark for new IPO loans after just a week. They are also earning other fees such as placement/facilitation/arrangement of 1 – 2% of each loan, fees for bankers cheques, returned cheques, money transfer and other myriad charges from the IPO process.

And the fine print of many bank loans lack clauses that deal with some critical questions which borrowers should be asking before they take out 3 year loans, such as;

– If I don’t get a full allocation, can I pay back say 80% or entire loan of loan immediately?
– If shares rise to 10 shillings can I sell my shares in June and pay the bank?
– If price drops to 4 shillings and I want to cut my losses, can I sell the shares?

Multiple share accounts: CDS gets 30 shillings per application, and the transaction managers have warned retail investors not to open many accounts and apply for IPO shares in many names. I saw one I-bank report, which mentions that investors who do this will be charged a 1.5% consolidation fee, but that is not contained in the prospectus.