History Repeats

It is now acknowledged that commercial banks have put the ghost of bad debts behind them and have moved on to new clean lending books. However a lot of the decline in non-performing assets can be attributed to an increase in the overall loan book (not really a decline)

Also, the future may not be without a repeat if you fast forward two years from now when a fraction of the unsecured loans being hawked at anyone with a pay slip now will likely have gone bad. With the passage of the in duplum rule banks have to cut their losses and begin collection efforts as soon as they realise a loan is in trouble.

But the courts are clogged and it is difficult to collect from unsecured loans as there are no assets to recover and where the amounts being pursued are not worth the legal cost in money and time.

Other recent happenings

– Diamond Trust (Kenya) to participate in rights issue of Diamond Trust Tanzanian where it owns 33%
– Equity bank growth getting super heated?
Family Bank is Kenya’s newest bank
– Housing finance new product for first time homeowners
– Kenya Commercial Bank gets a new CEO
– Perennial loss maker Oriental bank (formerly Delphis) is on track for a profit this year following a restructuring deal at Miwani Sugar.

Back to accounting school

Back in school there was new maths (though I forget what that was about) and now there’s new accounts coming with no net income and replaces net profit with a total comprehensive income figure that includes gains and losses now kept in other parts of the financial statements such as currency and hedge fluctuations. It also combines the balance sheet and cash flow statements resulting in assets and liabilities being group together as operating, investing and financing categories.

Tagged – KQ edition

Got tagged by Mwari which has happened before and I have given some answers.

I am still preoccupied by the Kenya Airways plane crash so I have decided to find some aviation related answers for the tag. I have been a long time shareholder of the airline till this January. When I started actively buying shares, I bought several KQ at 11 and 12 shillings and later sold them at 24/=. I thought they were undervalued at 11, was happy when they doubled and I sold, but I doubt if anyone could have foreseen the bull market that sent KQ shares on to 140 shillings in 2006 (see share regrets).

1. First thing is how much I love flying. As I said when previously tagged, put me on a plane anytime.

Lunch date I’d accept any day

2. My first Kenya Airways (KQ) flight I recall was about a week after the 1982 coup attempt. The family decided that a holiday was in order and so we took a KQ flight to Mombasa. It was a Fokker Friendship (F27) aircraft and in those days the route included a stopover in Malindi, before a short hop down the coastline, passing over hotels and so many tempting swimming pools on the way to Mombasa.

3. Next flight I recall was maybe in 1985 or 1986 – another Mombasa trip. It was supposed to depart Nairobi around mid-day, but the flight was delayed for mechanical, or some other reason (KQ was known to have such flight delays in those days). So we were delayed for about 5 hours till the next available aircraft was ready and wow it was a (then) brand new Airbus 310. I was so impressed, the plane was huge and quiet and I sat over the wing and marvelled at the flap arrangements. (On another previous flight on an older 707, I had been shocked to see some greasy green sponge rags inside the engines as the plane braked on landing). Anyway, at the end of the A310 flight I was still in awe that I got to the terminal and realized that I still had my plastic soda cup (with the KQ logo on it) – which “young me” tried to give back to some of the airport people.

4. I once worked as an airport security guard/Marshall – you know checking for bombs, guns etc. It was a summer job during university and before 9/11, airport security was something not taken seriously – hijackings were a non-issue and no one (except some evil genius) could have foreseen endings to routine flights as we saw that day.

Anyway, airlines never took security seriously and outsourced it to the cheapest company possible – as you could see by the way the guards were treated. Almost any warm body who could pass a drug test got the job and on the first day, you got a uniform and were put straight on the job in training (but on ‘probation’ for a week – until your drug test results came through). It was the lowest paying job in the airport (even less than McDonald’s workers), but for someone who loved being around planes, it was a great opportunity.

5. I am mystified by the so-called carbon credits, air miles, and plant trees for carbon emissions etc. movements. At the airport I worked at, about 90 – 95%% of the flights at the airport were small (737 types) aircraft flying local routes – as is probably the case at most European and American airports. So out of the hundreds of flights coming into a European airport on any given day, can even more than 1% of them be from Africa? So how do our vegetables and flowers get blamed / and taxed for harming the environment?

6. The worst flight I ever took was in a (4-seat) small plane from the coast to Nairobi (Wilson Airport). We flew through a thunderstorm and the plane was tossed about like you would not believe – I thought I’d get sick and wished the flight would be over, or even turn round back to the coast. Also in the same way you’re told to never go to a restaurant kitchen, sitting with a pilot of a small plane can scare anyone new to flying as you see the pure mechanics of flight. (The co-pilot seat was empty and observing the dials, rudder pedals and joystick move around was scary to watch as you wondered how this could be happening a few thousand feet up in the air) Such turbulence. is something I have never experienced on bigger planes such as a 737. There are dozens of flights in the air as you read this navigating through rain or snowstorms or other bad weather safely. If an airport is unsafe (runway flooded or snowed), it is shut down and flights are forbidden to take off or land. But if it’s open to fly, flights go on as usual. Pilots are trained for this and maybe the KQ investigation will prove me right that flying through a thunderstorm – while being uncomfortable for passengers, is not a dangerous activity.

7. Oh and the corporate blog opportunity I sought last year was with Kenya Airways. My pitch was not successful, but I must commend the way they have handled the aftermath of the accident so far. They are dealing with many anguished families, harassed airport official, bureaucrats, political busybodies, snake oil salesmen(asking if the West African route is jinxed), safety engineers, shareholders, people skeptical of flying in Africa, and the flying public and each group requires a carefully tailored message.

That’s the end of the tag, as most of the people I’d want to tag have already answered, All I ask is that they keep flying and enjoy the ride.

Jobs & opportunities May 13

Fund accountants at Alexander Forbes financial services (EA) . Apply to actuaries@aforbes.co.ke by 18/5

DCDM advisor services seeking high caliber individuals to work in audit, business advisory and corporate financial services. Apply to admin@dcdmkenya.com by 18/5

Apply online for dealer (treasury) at Family bank by 15/5

Housing finance relationship manager relationship officer, marketing officer. Apply to human.resources@housing.co.ke by 18/5

Program manager at the Institute of directors (Kenya) . Apply to info@iodkenya.co.ke by 23/5

Kenya Parliament: Seeking a director of information & research services (PSC 14) in charge of hansard, research, ICT, public relation & budget office. Apply by 31/5 to the secretary, parliamentary service commission 41842-00100 Nairobi

KPMG: Acknowledging Kenyan talent earlier this year was Haliburton, and this month it’s KPMG UAE that is seeking to Kenyan audit and financial advisory professionals to work in Muscat, Dubai, Abu Dhabi, Sharjah. Apply to ae-recruit@kpmg.com

Nation media group is seeking website designer feature writers and other positions.

Various at Safaricom including Forecasting Controller, Management Accountant – Product Analyst, Head of Retail, Head of Customer Management, Materials Inspection Officer – BSS & MW, Senior CRM System Developer, Business Intelligence Developer. Also Chief Business Development Officer and Chief Supply and Administration Officer for which you apply through PricewaterhouseCoopers at ess.ke@ke.pwc.com

business writing
Business plan opportunities found at Kenyan Pundit and PSD blog

Nairobi Shares Portfolio – May 2007

Be a vulture

The Portfolio review is being done a week earlier than expected as I usually try and update six months from last review.

However, in keeping in sync with other blogger portfolios recently released by Odegle Nyang and Riba Capital, here it is:

Current portfolio
Diamond Trust
Express Kenya
Kenya Commercial Bank
Sameer Africa
Scangroup
Stanbic Uganda
Total Oil
* Uchumi (suspended)

What’s changed?
There are fewer shares and portfolio has less value than before as I sold more shares than I bought back.

In: Stanbic (Uganda), Total
Out: Crown Berger, Kenya Airways, Kengen
Increased: Diamond Trust (Rights)
Reduced: –
Dividends expected: D-Trust, Express, KCB, Scangroup, Total
Unexpected gains/losses: Express bonus share, KCB share split
New listings not taken on: Access Kenya, Mumias (Rights)
Best performer: Stanbic (Ug)
Worst Performer: Sameer Africa
Looking forward to: Kenya Airways, Safaricom IPO

Performance Summary: The Motley Fool advises that investors should beat the share index to consider their returns a success. The NSE 20 share index is down 10% in the last six months while my portfolio is down 13% from November 2006.

I sold Kenya Airways shares at around 120/= and for the first time my portfolio does not have KQ shares. If the price continues to drop, I expect to buy some shares in this great company in the coming days, before they announce their year end results – which should have been finalized, but may be delayed by post-Cameroon events.