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bankelele

• June 12, 2009
• 10:38

  Mobile phones lower the cost of business

   » ‎ bankelele

  Tags:  Remittance  

  Money Transfer Within Kenya Part 3
  
  A comment from @alykhansatchu on Money transfer lead to an update of the first post about money transfer from about 3 ½ years ago before the advent of mobile money transfers.
  
  At that time, the cost of sending 10,000 shillings (then about $136) within Kenya was Kshs. 1,700 ($23) with Western Union and 1,850 ($25) with Moneygram - working out to a remittance cost of about 17% - 19% for an instant money transfer. This was mostly done at a few commercial bank branches, some foreign exchange bureaus, and at post offices around the country within banking hours.
  
  90% savings: A lot has happened in the last few years mainly in the form of the arrival of money transfers via mobile phones by MPesa from Safaricom and more recently Zap from Zain.
  
  A recent post last week noted that Western Union in Kenya have just lowered transfer costs to flat rates of 2% i.e. almost 88% cheaper than what they were at the time.
  
  In the last few years, millions of Kenyans have moved on to mobile phones for money transfer and I can’t recall anyone who uses banks for these transactions. Mobile phone have maximums of about $430 (35,000 shillings) for money transfers, but this is more than enough to cater for most remittances, including the emergencies that necessitate instant transfers.
  
  And mobiles are still cheaper; the 2% western union charge to transfer 10,000 shillings works out to about 200 shillings. A transfer of the same amount by Zap costs 75 shillings (0.75%) and 105 shillings (1.05%) by M-Pesa (after combining sender and receiver fees)
  
  International remittance to get cheaper?: Zain hope to link Zap to allow transfers to customers of Zain in different African countries. And Safaricom are setting up a link for transfers from the United Kingdom to Kenya. When these are established, we should also see the cost of internal remittances, whose sometime high cost is a cause for complaint for many Africans in the Diaspora, also drop significantly.
• 0:34

  Athi River Mining Board evicts Bamburi Cement as Director

   » ‎ bankelele

  Tags:  Corporate governance  

  
  
  Excerpts from the 2009 Athi River Mining annual general meeting (AGM)
  
  Athi River Mining, Kenya’s 3rd largest cement company held its annual general meeting (AGM) on June 11 2009 at the Grand Laico Regency Hotel. It was mainly presided over by the Chairman Mr. Palle Rune and Managing Director Pradeep Paunrana.
  
  After the finance director gave a review of 2008 performance – sales of 4.6 billion ($58 million) and a profit of 503 million ($6.3 million) (but had an error column labeled 2009 numbers and skipped over the net current assts position instead focusing on global credit rating A1 rating of the company)), the MD took over and outlined his plans for the company going forward along with a talk on the state of the cement business in East Africa.
  
  ARM Outlook
  - ARM had no cement growth in 2008 because they are at full capacity, and same with fertilizer. fertilizer sales rose sharply to almost 1 billion shillings, but that was because the price of fertilizer shot up in Keya. It is mainly sold o tea farmers, cheaper than fertilizer imported by KTDA and gives better yield. Silicate sold mainly export markets Mozambique, Malawi, SA
  - 26% of ARM sales were from exports, but were hampered by strong shilling
  - Project to haves sales of 6 billion in 2010 rising to 13.4 billion by 2012
  - Currently produce 1,000 tons per day for the Kenya market that has 5,000 tones per day production capacity. With new plant in Tanzania, ARM will go to 2,000 tons per day from January 2010 - the new plant in Tanzania will be largest plant in east Africa
  - improved production efficiency: now have the best margins in cement production in Kenya, ahead of Bamburi and a distant EAPC.
  - improved energy efficiency in cement production - East Africa. Saved 16% (about25m) in 2008 and expect to save about 50 million in 2009 – they have achieved international benchmarks
  - building their own clinker plant in Tanzania, locally produced clinker cheaper than imported clinker by about 1/3
  
  Cement in EA
  - Cement a growth business, and there’s great demand in this part of Africa for building work, and in the future for roads
  - Cement grows at 2x GDP in east Africa , and has been at about 15% p.a. for last few years
  - Comparing cement companies across region shows a variation in pre-tax profit margins ranging from 36% at PPC (SAfrica) and Tanga (Tanzania), while in Kenya Bamburi was 18%, ARM 17% and EAPC -13%
  - Egypt became a new importer of cement in 2008
  
  Shareholder Q&A
  - borrowing costs are high and growing, why? high borrowing for expansion- they chose that route instead of the equity one. which will probably strenthen Bamburi's position
  - acquired minority shares in Tanzania subsidiary, but did not get Kenya shareholder approval, why not? Chairman said they’d never get anything done if they had to bring such things to a vote
  - Why not sell cement in south Sudan and Rwanda? Wont go for those markets, they are focused now on the highly profitable Tanzania market, and less profitable S. Sudan market is better served by rivals (tororo and hima)
  - when will shareholders visit new Kaloleni plant as promised by the board? perhaps AGM next year will be held there, but its open year round for any shareholder to visit
  - why is ARM cement and fertilizer not seen in retail shops around the country ? MD explained that virtually all their product was sold to repeat customers – e.g. contractors who took the cement at factory to building sites, and same with tea farmers
  
  Hot Button moment: director elections
  Three directors were up for re-election – Bamburi Cement, Michael Gondwe and the deputy chairman H. Paunrana, none of whom were present or reprsented.
  
  Bamburi Cement, a rival and Kenya’s largest cement producer own almost 14% of company, and are second largest shareholder in company. Bamburi had not sent a representative, and their reserved seat at the board dais was empty
  - The Chairman recommend that shareholders vote against the re-election of Bamburi. He said it was clear that Bamburi does not want ARM to grow or produce more cement. They have been trying to sabotage ARM in international circles. I noticed in the minutes of last years meeting, for the vote to split the company management, Bamburi had requested a poll vote be taken. Chairman summed it up by saying that the board was not comfortable disusing ARM company business in the presence of a Bamburi representative
  - One Shareholder queried if company had obtained legal advice to which chairman answered yes the board had even got two opinions
  - Another shareholder feared that if Bamburi were voted out and then dumped their shares, it would affect other investor; the deputy MD replied that snares would be snapped up quickly and said Bamburi rights as a shareholder and director were separate unrelated matters
  - Another shareholder asked about an ongoing land dispute between ARM and Bamburi for limestone deposits; CEO summed it up as follows: ARM scouted and located a deposit of limestone. Signed a least for 540 acres with Kitui town council. Bamburi tried to get this overturned, and the former Local Govt. Minister Musikari Kombo had tried to broker a sharing arrangement. Bamburi got high court injunction and ARM and Kitui council have now gone to court of appeal, a process that may take years. Courts and government tried to broker a settlement, but two companies are too far apart
  - After the arguments shareholders present unanimously voted against the re-election of Bamburi as a director of the company.
  - The two other directors, though absent, were re-elected unanimously. Mr. Gondwe of PTA, the company’s bankers had given his apologies as he was involved with other bank business on that day, while Mzee (old man) Paunrana, though over 70 was described by other directors as being a key guide in day to day management of company (not just a honorary deputy chair)
  
  Goodies: T-shirt, tote-bad, keychain, lunchbox from the Laico
• June 10, 2009
• 9:00

  Delta, Zain and KQ Tweet Around

   » ‎ bankelele

  Tags:  George Ayittey  

  and other Bank Twits
  Twitter is a micro-blogging tool that is really nifty for doing mini-posts, forwards and other remarks that (are on any subject) and are maybe not worthy of a full blog post. Here’s a summary of the last few days on Twitter:
  
  May 29
  - @MauriYambo Kenya Co-op Bank directors shareholding Stinks http://bit.ly/EvI2d
  - KTN’s Larry…. Madowo @larrymadowo on Twitter
  - After a few drinks I discover I may be related to @kafai and @gishungwa! #TIA
  
  May 30
  - Morning traffic jams in Nairobi Kileleshwa. Spy some Apts being built into the river & fear that one day, river will rise & reclaim its banks
  - Government of Kenya shot itself in foot with punitive alcohol tax. Spirit brewers going belly up, Uhuru should correct
  
  May 31
  - Happy birthday young @intelligensia
  
  Jun 1
  - @mwaikibaki will launch Kenya’s fibre optic cable this month
  - @mwaikibaki says Kenya census starts august 24. Ends with his famous phrase, calls hecklers #pumbavu
  - Cadbury seems to have discontinued my fave choc wafer, while alvaro is on sale - buy 5, get 1 free!
  
  June 2
  - Some Nairobi buildings were designed by Mario bros - with secret floors, VIP lifts, hidden entrances, hostile guards to negotiate
  - Santander Bank may sponsor Ferrari next year - does that also make Alonso their new driver? http://tinyurl.com/mgukmu
  - Does patient capitalist Jacqueline Novogratz @jnovogratz have the answer to the role of aid in development? http://tinyurl.com/q9llxb
  - The African Union wants to set up an African Central Bank http://bit.ly/QcMav
  - @TerryanneC Delta Airlines maiden flight earlier scheduled for tomorrow from Atlanta to Kenya postponed indefinitely
  - If I had to subscribe to one magazine for life, it would be the Economist
  
  June 3
  - @coldtusker -even without airport CEO, artur, 1jet1 - US may want more than one airport checkpoint to filter passengers, so non-stop no go
  - @mamboleo ranneberger welcomed delta in the news and was to officiate today. Mwakwere has been in US for a week waiting to fly
  - @MIMImagazine new Sade album this year http://bit.ly/Ywv14
  - What's wrong with Kenya airport Security? http://tinyurl.com/qmmem2
  - Want to speak like Kenyan kids? - try the Sheng dictionary http://www.sheng.co.ke/kamu...
  - Got an accurate shares statement by e-mail from CDSC Kenya - so my stockbroker is still honest
  
  June 4
  - Should companies care about what’s written about them online? http://bit.ly/oiYFw
  - Former ministers and MP's mentioned in parliament as masterminds of some collapsed Kenya pyramid
  - Michuki and Ruto top a NTV viewer poll of best performing ministers in Kenya. Ok... #Kenya
  
  June 5
  - @alykhansatchu "In September 2008, all hell broke loose, it fell like the Titanic" - Titus Naikuni Kenya Airways CEO
  - @coldtusker Kenya Airways losing 4 billion after Zain's 7 billion loss, there's a lot of blood!
  
  June 6
  - Nairobi city council asking 100 shillings ($1.25) to photocopy each 100 words of new laws that will punish residents #FAIL
  - Follow George Ayittey @ayittey for a harsh dose of Afro-reality
  - JKIA arrival lounge - musician Jua Cali and Uganda leader Kizza Besige arrive unnoticed
  
  June 7
  - Button-Brawn wins turkey GP. Kenyan crowds are ABB - Anyone but Button
  - @karuoro does XYZ fail for taking shots at politicos who are too funny to be imitated or is it the poor voices?
  
  June 8
  - Reading Africa confidential to see which way Gabon goes: Lady Senate president should succeed, but Bongo Jnr. is minister of defence
  - Weekendgossip: Delta planned Nairobi route before they mergered with Northwest - who are KLM partners. KLM have invested for many years in Kenya Airways so does it make sense for Delta to fly to Nairobi?
  
  June 9
  - Why would Wanjiku Mugane quit the EABL Board? http://bit.ly/u6a6V
  - R/T @kainvestor @kachwanya Zain looks to close $12bn deal to sell Africa unit - report: http://tinyurl.com/m4wofy
  - Soldiers are not allowed with guns in the room (and other hotel rules) http://bit.ly/BCAV8
  - Time to do the tax return thing - 3 out of 4 years waiting for a tax refund
  
  June 10
  - How the Lakers won Game 2: I wish Bill Simmons watched Soccer and F1 because there are more conspiracies than NBA http://tinyurl.com/ma2gax
  - The folks at DNA Kenya have published a Promiscuity Index Report: Ave No. of Steady Mistresses! Ave No. of kids per steady Mistress! Ave No. of 1 night stands since wedding! #DNAKenya http://www.dnakenya.com
  spot the difference
• June 05, 2009
• 9:26

  Pyramid Schemes in East Africa

   » ‎ bankelele

  Tags:  NSE investor awareness  

  Back in October 2006, I wrote two posts about pyramid schemes that had mushroomed and would eventually ‘burn’ thousands of investors in Kenya.
  
  And the last year has revealed bigger pyramid scams in the form of Bernie Madoff and Alan Stanford, and just yesterday in the Kenya Parliament, some political leaders were un-masked as some of the master minds behind some of the collapsed Kenyan schemes.
  
  Image of pyramid investors from another business daily newspaper article on pyramids
  
  So what was the genesis of the schemes and how they ended? And more important, can they happen again?
  
  Pyramids Rise
  - Early investors reaped, and told others about their success - i.e. doubling, tripling or even greater returns in a few months span
  - Some schemes were promoted by churches (who received tithes in return)
  - Pyramids opened new offices and hired new staff all around the country
  - New pyramids opened up cloning existing ones, but promoting a slightly different product/concept
  - People took loans to invest in pyramids
  - Peoples sold land/ shares / other assets to invest in pyramids
  - Pyramid investors cut across all sectors from rural farmers to bank managers
  
  Pyramids Peak
  - Early investors reaped, but were greedy and ploughed back as much as they won
  - Pyramids grew so big they overwhelmed their managers – some stopped accepting new depositors (but not new deposits which were essential to the chain)
  - Banks complained they were losing deposits at a time when interest rates were very low
  - With IPO's few and far between, stockbrokers complained they were losing investors during a bull market period
  
  Pyramids Fall
  - Banks put the squeeze on pyramid schemes, by freezing these recipient accounts with the funds in them
  - Pyramids without cash, tried to switch to different banks and accounts to process their funds
  - Banks warned other banks and the Central Bank issued some cautionary notices on schemes
  - Some pyramids tried to convert into cooperative societies
  - Some schemes bad-mouthed other pyramid schemes as unstable
  - When locked out of banks, pyramids moved to safe houses in residential areas where they continued to receive/pay cash
  - media coverage kicked in; some angry investors complained on TV about lost money and brought media crews to the safe houses showing other angry investors
  - Deposits dried up, and investors demanded their cash.
  - Pyramid schemes all collapsed largely at the same time in 2007
  
  Sifting the rubble
  
  Could they have been prevented?
  - They were unregulated: Neither the central bank, capital markets or co-operative sector regulator had over-sight over the schemes. Parliament was focused on micro-finance and anti money-laundering regulation bills.
  - KYC: Schemes relied on the banking system to move around the money; and if banks applied true know your customer (KYC) principles, they’d have smelled a rat - with hundreds of people queuing in their halls to deposit funds into a single customers account
  
  Unanswered questions
  - What happens to the millions of shillings frozen in bank accounts?
  - What happened to employees of these schemes? And if rogue stockbrokers were partly brought crash down by thefts from within (internal fraud /‘robbers robbing robbers’) could this also have happened at some schemes?
  - Legal grey area still exists. Have any promoters being charged in court? Can any investors sue promoters for losses? The Cooperatives Ministry Task Force is looking at how to compensate investors - but is this justifiable?
  - Can schemes rise again? History teaches us that pyramid/ponzi schemes will happen again and again. Maybe using the mobile money transfers, or next time there’s an election. The Business Daily mentions they may have spread to neighbouring countries
• June 03, 2009
• 5:09

  Delta Denied Permission to Fly Direct to Nairobi

   » ‎ bankelele

  Tags:  delta airlines  

  
  
  Delta are postponing their arrival to Kenya again and Liberia as well. It’s been a long wait for Delta to come to Kenya, with the resultant direct flight to US and what’s a few more months? That Liberia was included in the statement that cited insecurity matters kind of cushions the blow.
  
  And what are some of the insecurities that maybe caused the department oh homeland security to put a pause on the route? Shashank has a nice post on security at JKIA - -i.e. the Jomo Kenyatta International Airport – in Nairobi
  That the situation in neighboring Somalia is escalating again, probably makes US security officials want to put as much distance between the US and East Africa – and by having more than one airport e.g. Amsterdam, Dubai, London filtering passengers from East Africa is a safer way than having them walk into Atlanta directly from Nairobi.
  
  2009 still looks like a good year for investments to Kenya and Delta will be more than welcome when they do land. The competition will be welcome here, and I like that Delta has a corporate blog that will perhaps rub off on some of our local airlines with PR woes.
  
  #########
  excerpts from the Official Statement
  
  Delta Africa cancellations from Delta Corporate Communications
  
  ATLANTA, June 2, 2009 – Delta Air Lines (NYSE: DAL) has been notified by the Department of Homeland Security (DHS) that the Transportation Security Administration will require more time to approve Delta’s planned direct flights to Nairobi, Kenya and Monrovia, Liberia. Delta in response issued the following statement:
  
  “Delta regrets any inconvenience to our customers caused by the postponement of our new direct service to Kenya and Liberia. The airline is proactively contacting customers to reaccommodate them on long-established connecting flights offered by our joint venture partners Air France-KLM and other SkyTeam member airlines, which carry Americans to these destinations in Africa through their European hubs.
  
  “Delta appreciates DHS Secretary Janet Napolitano’s continued focus on finalizing approvals for Delta’s direct service to Africa as quickly as possible. Delta in October 2008 notified the U.S. government of its plans to offer new service to Kenya and Liberia. However, Delta was informed only yesterday by DHS that it would require additional time to approve these new flights.
  
  “Africa continues to be an important region for Delta. Delta is the only airline offering scheduled service between the United States and Africa, currently serving six destinations in five countries: Accra, Ghana; Cairo, Egypt; Johannesburg and Cape Town, South Africa; Lagos, Nigeria; and Dakar, Senegal. This week Delta upgraded its service between Atlanta and Johannesburg, South Africa, to a nonstop flight operated with a Boeing 777-200LR aircraft featuring 180-degree full flat seats in its BusinessElite cabin.”
• May 29, 2009
• 8:16

  SWAG Like Us

   » ‎ bankelele

  Tags:  SWAG  

  Thursday and Friday have seen a series of company annual general meetings (AGM's) for their shareholders. Thursday had Standard Chartered, and Nation media group, while Friday had Co-operative Bank, Diamond Trust, CFC Bank, and Scangroup.
  
  With over 50 listed companies, why some days become so popular is a mystery; calendars can be spread out by the capital markets authority. It has been difficult for media and investors to keep up with this; media houses will perhaps give coverage to only one event (e.g. Nation mainly featured their own AGM), while a common lament of shareholders has been there are 365 days a year, how do these companies all pick on one day to have five different meetings?
  
  Investors want SWAG: An excellent series of (3) articles on investor relations (IR) management in East Africa notes that retail investors are often there (at AGM’s) for the free lunch, not for company information.
  
  And how do investors deal with the challenges posed these last two days?
  - try and attend every AGM
  - Dashing back and forth to attend all, spend as much time as it takes to get SWAG
  - Send a friend or relative as a proxy to get SWAG while they do the same at another meeting
  
  What is SWAG? The urban dictionary gives the best definition of SWAG which can be
  
  promotional merchandise for a band, record label, or other entity in the music business, usually distributed at concerts. May include t-shirts, stickers, promo CDs, posters, etc. Often free, but not necessarily; a t-shirt or record purchased at a concert might still be considered swag, especially if it is a design or release that is not readily available in the mass market. The chief difference between swag and regular merchandise is that its purpose is not to make a profit, but to promote the band/label, and reward its supporters by giving them something cool and unique
  
  Or
  Stuff/Sh*t We All Get - Relating to the trade show convention industry, where exhibitors hand out "free stuff" to visitors. Most of the time these items are purely promotional materials, and are fairly worthless. i.e. pencils, mugs, and mouse pads. SWAG always has the company name, logo, slogan, product, service, and contact information clearly printed somewhere on the item/s
  
  So SWAG is why many investors attend corporate annual general meetings. Don't believe that institutional investors and media attendees are immune to the lure of SWAG - they also get their own SWAG, often the same stuff (meals & promotional items) but at different more respectable venues.
  
  Why SWAG?: Companies should not lament SWAG as being expensive items that are the price of being a listed company that has to satisfy hungry shareholders. A shareholder has to show up (or send a proxy a.k.a authorized representative) to get some SWAG.
  
  Attendees have to show up to get SWAG, those who are not in attendance or represented don't get any except the dividend which all shareholders get, but according to the number of shares they own. For many shareholders, their SWAG is much more than the dividend that their shareholding entitles them to
  
  For the guest It is also a universally African concept to honour your guests with a meal.
  For the host And for the company giving out SWAG this can be vital to the orderly and delicate flow of a company’s annual general meeting. Also, in marketing terms, a well designed, durable and branded cap, travel bag, t-shirt or umbrella, will be used to market the company for years to come in faraway parts of the country where even the company’s products are not sold, and long after the shareholder has sold their shares.
  
  SWAG Costs: While the costs of SWAG items (from vendors like Vajas and San Valencia) has not increased by much, the number of shareholders seeking SWAG appears to have gone up significantly in these tough economic times. many show up for SWAG and don’t even enter the meeting hall and some companies acknowledge this by handing out SWAG before the meeting starts. And therefore the cost of hosting an annual general; meeting has gone up Safariom with 800,000 shareholders is probably contemplating the SWAG question for its annual general meeting set for august 19.
  
  How can they minimize the cost of SWAG?
  - have a meeting at a remote venue and hope few show up for it
  - publicly announce that they are not going to be giving out any SWAG. But tough to do when well paid directors and executives are announcing billions in profits
  - be stingy with the SWAG (Yesterday, the Nation Media Group gave out copies of their newspapers (Daily Nation, Taifa Leo, Business Daily and East African) along with a buffet lunch, while a few years ago they gave out gym bags & polo shirts with lunch and transport to the venue)
  
  What's your opinion of SWAG?
• May 21, 2009
• 10:24

  Reading the Tea Leaves at Stanchart

   » ‎ bankelele

  Tags:  CSR  

  
  The CEO of Standard Chartered Kenya explains in the annual report that their strategy is aligned to that of the UK parent group, and that the (Kenyan) bank has focused on chosen markets, does business with customers they know well and products they fully understand - adding that, so far, the standard chartered group one of the few international banks that has weathered the global crisis.
  
  I’m not sure that makes sense to shareholders since if the (UK) parent also drives the same strategy here in Kenya, being conservative has not been as kind to the bottom line
  
  Bank assets through the years
  2005: Barclays Kenya 105 billion, KCB 74, Stanchart 72, Equity 11
  2006: Barclays 118 billion, KCB 87, Stanchart 81, equity 20b
  2007: Barclays 158 billion KCB 112 Stanchart 91 equity 53 billion
  2008: KCB 174 billion, Barclays 168, Stanchart 99, equity 77
  
  The conservative bank has seen its peers that have aggressively expanded, also grow at much faster rates. 4 years ago, Stanchart was almost equal in assets with KCB and today KCB is almost twice as large. Stanchart also maintained the No.2 profit figure behind Barclays each year, but falling further back, until in 2008 both KCB and Equity have passed its pre-tax profit position.
  
  Outlook for the bank
  
  - Change in strategy – should they have gone retail? They have Diva accounts (for ladies) and X account (for yuppies), mortgage, and corporate finance where they have cut some big deals
  
  - New Chairman: There are on-going board changes, both executive & non executive. Chairman David Njoroge (board member since 1996, and chairman since 2006) and director J. Mugo (of federation of Kenya employers) will both retire at the AGM this month
  
  - In 2008, they were the only big Kenyan bank to record a drop in income and profit. |Their loans went up 10% to 43 billion, and deposits were up 4% to 77 billion; also income was up, but costs went up 13% to 5 billion owing to infrastructure, technology, and staff costs. but only added two branches in year). The CEO says they have set aside 3.5 billion for new headquarters, acquire/refurbish branches (likely to be for high net worth clients), new core banking system, electronic banking new staff – all part of the largest group investment in Kenya.
  
  -Their 2008 annual report is one of the biggest I have seen at 105 pages. The chairman's statement takes 6 pages (3 English, 3 Swahili), CEO statement 8 (4/4) , (8 pages on community, environmental & development) - which includes mentions of their being the lead financial arranger for TEAMS sub –cable and Kengen energy expansion), one page on HR (mentions 48% of employees are women, have policies for extended maternity, non-discrimination), One page on tackling financial crime (they trained 300 staff on fraud & also trained 60 Kenya anti-corruption commission (KACC) staff on financial crime risk) - and finally 53 pages of financial statements and notes
  
  - They spent 64 million on corporate social responsibility (CSR). The annual Nairobi international marathon (sponsored by Stanchart) raised 12.5 million in 2008 up from 9.4 million in 07 - and the funds channeled to nine eye hospitals around the country
  
  - Their statement on corporate governance has a policy barring insider trading of the company shares
  
  - Loans to the manufacturing went up from 5 to 12 billion and real estate at 4 billion, transport & communications at 7 billion, and wholesale/retail trade at 10 billion were their main loan categories
  
  - This month shareholders will amend article of the company to allow financial statements be sent by fax, e-mail or be published on their own website/Nairobi stock exchange (site) while notices may be simply advertised in daily newspapers along with abridged financial statements as long as they include an e-mail or postal address from where shareholder can request & obtain full accounts. Shareholders will also vote to allow electronic payment of dividends
• May 20, 2009
• 3:25

  Total 2009 AGM

   » ‎ bankelele

  Tags:  triton  

  The 55th annual general meeting of Total Kenya was held on May 19 2009 at KICC and was presided over by company Chairman Herve Allibert
  Easy registration took a minute. Total have introduced an electronic check-in, shareholders or their proxies show up with a bar code, which is scanned and they as they sign in
  
  Q&A
  
  Erroneous publication: company secretary apologized for some omitting list of top shareholders and wrong agenda contained in the annual report; saying the printer gave out wrong copy.
  
  Buyout of Chevron assets: in 2007 Chevron decided has divested from petrol stations in west and east Africa and Total is buying their stations in Kenya and Uganda. The chairman clarified that parent Total Group (pronounced Tota hutra -meh) is buying the assets and deal will be finalized in June 2009. Thereafter Total Kenya (78% owned by Total Group) will buy the assets from the Total Group. Total Kenya has obtained regulatory approvals in Kenya, is arranging financing for that deal, and the directors will call for a shareholders meeting in a few months to approve that deal.
  In answering another shareholder, Chairman added that Total Group is not divesting from Africa; they know how to do business in Africa, work well here and will continue to invest here
  
  Performance drop in fourth quarter: board member answered shareholder that it was true that Q4 performance was worse. He said it was a s a result of negative stock effect (oil bought at $140+ that was sold at lower prices), and company had to make provision of Kshs 171 million for a supplier (Triton?) who was paid, but failed to deliver products to the company. He added that Q1 of 09 was much improved as the company had received a payment of 150 million in refunds from the Kenya revenue authority (KRA), a feat, which the Chairman added, was very difficult to attain.
  
  Increase in borrowing costs: this had gone up because of the price of fuel was up, while they also had to pay upfront for all taxes
  
  Bio energy: the group does research and investment for that and deploys products such as bio-diesel now sold in Ethiopia
  
  No women directors Chairman said company was aware of this mis-match. They were continuously seeking some women to join the board and also plan to have more women in all management levels of the company
  
  Hot point I - Total’s Q&A format; instead of having shareholders stand and ask questions, Total have (for some years now) had shareholders write their questions down on notes which are then handed to the board table and the company secretary selects a few which to read. The directors were today accused of ignoring some questions, not answering other key questions properly (about the flat share price and lack of bonus shares), while altogether leaving shareholders and some directors in the dark . The Chairman said they would review the practice before next meeting. Another aspect of the meeting (the French Chairman called it a “general assembly” ) that was challenged was the time of the meeting 3 PM
  
  Hot Point II – Goodies:
  - Total still doesn’t get it; they always have buffet of meat bitings , today by San Valencia that is messy to serve with shareholders jostling to get some food before it’s finished. They should just serve lunch boxes.
  
  - each shareholder got a tote bag, t-shirt and an umbrella. Some shareholders complained that they had not got their gift items (but somehow other shareholder had 3 or 4 umbrellas) – and the company secretary was asked to record their names and see if the company could have them delivered after the meeting
• May 17, 2009
• 9:46

  Serena Copes with Kenya Tourism Tip

   » ‎ bankelele

  Tags:  Kenya domestic tourist  

  TPSEA (Serena) the only listed Kenya tourism chain had sales of Kshs. 3.2 billion ($40 million) and profit of 223 million (~$3 million) for the year ended September 2008 both down 12% and 54% respectively from 3.7 billion and 416 million in 2007.
  
  2008 was listed as one of the worst years for Kenya tourism with some smaller hotels going under receivership, laying off staff and shutting for prolonged periods
  
  Saved by Tanzania?: Serena was a beneficiary of diversification as the group integrated its east Africa operations in 2006. For comparison, in 2007 Kenya accounted for 2/3 of sales and profit, but in 2008, Kenya provided 59% of revenue and just 25% of profit, while Tanzania had 41% of sales (1.34 billion) and 75% of profit (167m)
  
  Unfortunately there’s no breakdown of income of properties they manage in Mozambique, Rwanda or Uganda. Serena owns or manages 8 properties in Kenya, 6 in Tanzania, 2 in Rwanda (Kigali serena, lake kivu serena), 1 each in Uganda (kampala serena), zanibar (serena inn) and mozambique (polana serena)
  
  Invest in tough times: At a time when some banks have sworn off new tourism projects, Serena is using the downtime in the sector to expand. Serena will invest 400 million in Jaja Limited a to develop properties in Nanyuki and Elementaita once it gets shareholder approval. Shareholders will also get the same 1.25 shilling dividend as for the year 2007
  
  Mt. Kenya seen from Nanyuki
  
  No beef: The Farmer’s Choice chain, a related company, supplied 26 million shillings worth of meats & sausages to Serena in 2008, down from 33 million in 2007
• May 13, 2009
• 9:49

  Centum seeks Carbacid

   » ‎ bankelele

  Tags:  Zain  

  and other Bank Twits
  
  Twitter is a micro-blogging tool that is relly nifty for doing mini-posts, forwards and other remarks that (are on any subject) and are maybe not worthy of a full blog post. Here’s a summary of my week on Twitter:
  
  - @louizah Zain Vuka has ended? Please confirm
  - @NTV showing IFC-funded docu on women entreprenurs - meaning manu-arsenal will be on tape delay - WHY? next @NTV ditched a static-filled channel & skipped their 'half time' piece to present second half live, on a much clearer signal! Kudos
  - Sports journo era over? Player asks for trade on blog team obliges on Twitter player thanks fans on Facebook http://tinyurl.com/d967eu
  - blog post Why Safaricom should spin off MPesa http://bit.ly/gYZ86
  - The Central Bank of Kenya reports have become incomprehensible B.S
  - Upgraded Safaricom Investor relations page has media and CEO briefings http://bit.ly/VBZ2f
  - Tanzania will now recognize Kenya manufacturers mark of quality http://bit.ly/USZHg
  - Delta Air round-trip intro fares from Nairobi include (ex-tax) $650-NY/DC, $975-ATL/Chi/ Dallas, $1124-LA/SF and $1440-Detroit
  - @kahenya @jamesmurua likes Riviera, which has good crowd and facilities, but beer is pricey and the place is a fire-trap
  - So Joe Biden met Nairobi mayor Majiwa in chicago. There, thats the end of the joke
  - Safaricom CEO says M-Pesa not yet profitable http://bit.ly/TDV8D
  - @leofaya says Kenyan promoters are killing Facebook http://bit.ly/zBHXB
  - Today's pavement uprooting is sponsored by access kenya - as the fibre optic railway is laid around Nairobi
  - @Archermishale sports conspiracy goes that where a sport wants to sway a big game, they put in a low-quality ref, but didn't happen on Wednesday
  - Safaricom partners with Kenyas' largest bank KCB http://bit.ly/J4l92
  - Kenya budget saga ($115 million) blamed on a typo - Quote ODB "N___ please!" http://tinyurl.com/p5hoyo
  - blog post: two bank shareholder meetings same day same building same time http://bit.ly/86lNq
  - @pinkm so you can only use debit, but not credit card to buy amazon books from KE? Interesting
  - Ethiopian Air applies to fly from Nairobi to Amsterdam and Nairobi –Liege (Belgiu
  - Land spin: Could there be a link between migingo island and the kampala land kenya got from Uganda military?
  - If MTN buy Yu or Access Kenya, they will have to negotiate with MTN matatu society for use of name
  - blog post Its Our Turn to Eat (is credit card worthy) http://bit.ly/YnriQ
  - NMG 2008 report gives prominent mention of new digital division, Making-Nation DVD and Zuqka portal http://tinyurl.com/qkcphc
  - Centum applies to the CMA to buy Kshs.350m of Carbacid shares and be largest shareholder of the Nairobi listed (but suspended) company
  - Senator cards advise customers to only upload to https, not http sites. It's rare to find credit company giving card advice
  - From Mars Group: Parliament's Report on the Kenya Budget inconsistencies http://blog.marsgroupkenya....
• May 12, 2009
• 9:45

  Book Review: It’s Our Turn to Eat

   » ‎ bankelele

  Tags:  John Githongo  

  a review of the book without having read the book. Note that I generally don’t like read reviews’. If I want to watch a movie or read a new fiction book, I won’t read any reviews of it till after I watch it; this is because reviews tend to contain too many spoilers and plot giveaways.
  
  During the May Day holiday weekend, I finally finished reading It’s Our Turn to Eat – the bootleg version, one which the author warned was not the real copy. It’s a fairly comprehensive e-mail; I’d wager its close enough to the real thing that and that over 90% of the blog readers here have read the PDF (real or faux) - and please don’t ask me for a copy.
  
  The introduction of the book to Kenya, a biography of former anti-corruption Tsar John Githongo (written by Michela Wrong), had three background factors
  - John Githongo is a powerful, polarizing person in Kenya; a patriot & champion to some, a traitor & coward to others. While his accounts of events related to Anglo Leasing has been published in his parliamentary reports; not much has been written about Githongo the person this is his story
  - While the Government of Kenya never commented or banned, the book, several Nairobi bookshops shied away from displaying or advertising the book. This was because of previous libel awards that bookshops who were near easy targets got fined for carrying books that powerful leaders (Nicholas Biwott) felt besmirched them
  - Also at the same time, a PDF version of the book also circulating and was forwarded and downloaded widely The author Michela Wrong and her publishing house realized that there was a leaked version circulating and:
  
  (i) Alerted her friends and the net community that a faux/earlier/incomplete version was being circulated
  (ii) Released a low cost e-book to counter the faux copy.
  
  Having only read the faux copy, I can only comment on what’s in it. I have no doubt it comes close to the real thing. I still intend to get a copy of the real book – either buying one from a friend, or having one delivered from abroad - good enough that I want to read the read the book - and not the E-Copy but the actual book; having a book still convey paper books have functionality, and durability that e-books don’t – I can read the book anywhere (matatu, bank queue, at lunch). Demand for the book is make me want to break a vow and obtain a credit card perhaps to buy it from Amazon (UK) or the publisher.
  
  Michael Wrong’s last book I read was In the Footstep of Mr. Kurtz, about Mobutu Sese Seko and his years as President of Zaire (a.k.a the Democratic Republic of Congo.) It’s the definitive book for anyone new to the Congo or wishing to understand the Congo's post-independence history, economy, diversity, people, problems etc. Likewise the Githongo book - focused on high-level government corruption, raw tribal political leadership, ease of corruption, political interference/weakness of judiciary - will be the definitive book of the Kibaki era (Kenya 2002 to the present) and until other government personalities commission their own biographies, this will be the way that the recent political history of Kenya will be understood. It would be nice to read about Michael Waweru on tax collection strategies, Peter Kenneth and the use of Constituency Development Funds, Esther Koimett at the Privatization process, and Kilemi Mwiria on free primary education etc.
  
  Other local reviews of the book.
• May 08, 2009
• 9:36

  AGM Split

   » ‎ bankelele

  Tags:  Family Finance  

  Family Bank and KCB 2009 AGM
  
  Family Bank is 25 years old this year and is about the 21st largest bank in Kenya. It is in some circles known as Equity Blue because of some similarities with retail giant Equity Bank (it operated as family finance building society till May 2007)
  
  They held their AGM today in Nairobi; it was a straight forward meeting, very informal. Chairman is Mr. Titus Muya who’s the founder and was also the CEO till about two easy ago when he relinquished that post reluctantly.
  
  Q&A
  Joseph Kaguthi, former PC, Anti-drug tsar is a shareholder in the company and also asked some good questions (he’ll be referred to as JK)
  
  Q. When will the bank list it shares? Many shareholders bought share in the bank in anticipation of it listing soon (JK noted they said they’d so it within three years and they’d be a market for their shares and asked the board to clarify the over the counter (OTC) market as more people want to buy shares in the bank
  A. Management replied that they were ready to list last year/early this year, but that the timing was not right I.e. Nairobi stock exchange was in a down mode, see Co-Op Bank shares after IPO
  
  On Presentation of the annual report
  - JK noted they have improved presentation of the report by including report, missions, vision, values, but he asked them to now include a list of top 10 shareholders as this was a governance issue
  Q. another asked why if retained earnings were high, the bank was giving low dividend?
  A. Need retained earnings to grow. Also company can’t pay share capital or premium back to shareholders
  
  Q. loans as security - One shareholder who’s a carpenter narrated a tale of how he fell sick for many months and ran out of funds; he wanted to take a loan using his share as collateral
  A. company act doe not allow one to sue company’s shares to borrow from same company
  
  Q. why are non performing loans high
  A CEO O said their bad loans are 6% of loan book compared to banking sector average of 11%. Also they are mining those and collected 100 million from non performing loans last year
  
  Investor outlook
  - Only customers can buy shares in the bank
  - May have raise capital in a few years owing to fast growth
  - Company registered opened on may 1, and divided (Kshs 1.50) will be paid on may 30 2009
  
  KCB AGM: KICC is a very popular site for annual general meetings since Philip Kisia (now appointed the new town clerk in Nairobi) rehabilitated what was a very run-down Nairobi landmark. But with almost 170,000 shareholders it may have been the wrong place to hold their annual meeting. The lines snaked all over the courtyard and registration took a couple of hours for some people I hear
  
  Comrade Sylkwan (thank you) was at the meet and gave a brief re-cap of the Q&A sessions
  
  Q: Why there was no proxy for on the financial statements which were issued at the AGM
  A: Shareholders had already been sent to the F/S and the previous years the proxy form was used by s/holders to collect multiple gifts
  
  Q: Why foreign institutional investors own a lot of shares in KCB and what benefits it brought to the Bank
  A. KCB shares are listed at the NSE and everyone is free to buy them
  
  Q. Age of directors was not indicated on the F/S. Since there were directors seeking re-election, wanted to know if any was above 70years
  A: None of their directors was above that age and if so they would have issued a special resolution
  
  Q: why KCB shareholders could not withdraw cash at the Uganda branch
  A: the CE said that it was possible to withdraw money unless there was a technical hitch on that day
  
  Q: Triton issue?
  A. Ignored this question (continuing a no comment on Triton or any KCB customer policy)
  
  stalled building construction on Waiyaki Way, rumored to be a Triton property
  
  Q: why the bank does not provide fare to the Shareholders who travel from far
  A: It was not possible to pay shareholders fare and share dividends
  
  Q: why the CSR budget was so high even when KCB was only issuing a Kshs. 1.00 per share
  A: KCB was spending 2.2b in dividends and Kshs. 54m was a drop in the ocean. KCB also needed to establish a good relationship with the community where the business is established.
• 4:47

  Honest Scrap Awards

   » ‎ bankelele

  Tags:  Tagged  

  
  I was tagged by Riviera Owner Kahenya whose site you can now comment on:
  
  Rules
  - You must brag about the award
  - You must include the name of the blogger who bestowed the award on you and link back to the blogger
  - You must choose a minimum of seven (7) blogs that you find brilliant in content or design.
  - Show their names and links and leave a comment informing them that they were prized with Honest Weblog.
  - List at least ten (10) honest things about yourself. Then pass it on with the instructions!
  
  10 things
  1. Contrary to Kahenya's suggestion, I don’t take the Google kool-aid; I don’t sing their praise or earn an adsense cent. Having said that they control too may aspects of my life (blog, e-mail, news-reader, and search), and whatever their motives, they are good hosts, caterers, and sponsors for skunkworks events in Nairobi
  2. My tech skills are nonexistent – just basic HTML. I’m not a techie, most of my posts are written in Microsoft Word
  3. I’m really not feeling my job these days
  4. I picture myself as Mr. Patel,a shopkeeper, behind the shop desk running the cash register (and laptop) from a small duka on Kirinyaga Road. I need a kick start into entrepreneurship
  5. I am jealous of the Ushaidi crew; nevertheless I am committed that I will be a good director of that organization. You will invite me right?
  6. Like Kahenya I love flying and once thought that (from the right angle) Martha Karua was hot
  7. I’m not good at forming friendships and have a rather small group of close friends
  8. My family, my core
  9. Several friends and relatives are reading this; but I don’t like talking about blogging in public
  10. I try and answer every tag with a commitment that I will not take part in another and will not pass it on to other bloggers
• May 07, 2009
• 4:10

  NSE Portfolio May 2009

   » ‎ bankelele

  Tags:  NSE portfolio  

  hit bottom? Time to buy?
  
  Last quarterly check of the Nairobi share portfolio was in February 2009 and a year ago
  The Stable
  
  Diamond Trust ↓
  Kenya Airways
  KCB ↑
  Safaricom ↓
  Scangroup ↓
  Stanbic (Uganda) ↓
  
  Review:
  - Best performer: KCB up 2%
  - Worst performer Stanbic down 30% (combination of share drop and weaker Uganda shilling), and Safaricom down 10%
  - In: Kenya Airways
  - Out: none
  - Increase none
  - Decerease none
  - Unexpected gains/losses: none
  
  Events & Outlook:
  - Performance: Portfolio is up 1% in the last three months while the NSE Index is down 3.5%
  - Bought KQ, tried to buy illiquid Kenol at 30
  
  Looking forward to
  - Dividend payments expected from Diamond Trust, KCB, Scangroup, Stanbic (UG)
  - Privatization commission has lined up several companies that may be availed later in 2009
• May 06, 2009
• 3:39

  M-Pesa IPO?

   » ‎ bankelele

  Tags:  Safaricom IPO  

  Mobile transfer solution M-Pesa from Safaricom was on Monday inaugurated as loan repayment tool for microfinance.
  
  SMEP using M-Pesa for loan repayment is now the latest M-Pesa partner joining satellite TV, medical cover, investment funds, spare part utility provides and insurance companies that now enable their customers to remit monthly or periodic solutions via M-Pesa.
  
  This phenomenon is not unseen, it addresses gaps in the banking sector; and now M-Pesa solutions are coming from the customers, not Safaricom - which is the way it should be.
  
  M-Pesa Flaws: M-Pesa with it's 5 million customers is not perfect and it may have reached the zenith for now; it is pricey, it requires business owners to put up substantial credit (float) to access the system, it's statements are crude etc. Electricity bills can now be paid by M-Pesa, but accounts take 48 hours to be credited, while with rival transfer product Zap (from Zain) they take 24 hours. The fault probably lies with Kenya power, which has forged closer links with the less established Zap and Standard Chartered Bank.
  
  Loan potential: M-Pesa, a Vodafone solution is now goes into the area, that no one can contain credit growth. The SMEP (micro-finance loan) repayments are just a start. Banks and savings & credit societies (SACCO’s) can easily utilize M-Pesa for loan repayments under the current 35,000 shilling ($440) daily transfer limit. e.g. a 400,000 shilling ($5,000) SACCO loan at 12%, repaid over one year will have installments of 35,932 per month, or a car loan of 800,000 shillings ($10,000) repaid over 3 years at 21% interest would have repayment of 30,140 per month.
  
  New markets: M-Pesa has been built on the back of Safaricom, operating informal relationships with subscribers who submit a bare minimum of information. That relationship requirement with customers requires a lot less than with a bank and international know your customer guidelines (KYC). Already, all the mobile companies have aspirations of moving on to international transfers and merchant banking which will also bring them more into collision with banks, western union and debit/credit card giants.
  
  New regulations: M-Pesa's already fractious relationships with banks is likely to get worse; and with (soon) three mobile companies offering money transfers, and all eating into bank ledger and interest income, there will be calls to rein them in. Soon it is likely that the government of Kenya will create an e-commerce regulatory body (another parastatal) since neither the communications commission or the central bank has absolute authority.
  
  Second Safaricom IPO: Vodafone should spin off M-Pesa into a separate company. M-Pesa is now able to stand on its own, and handle its own competition, regulatory, and licensing issues. Safaricom should let it go, focus on other voice and data services, while continuing to enjoy the revenue M-Pesa spins, by subscribing for shares in it. By freeing it from Safaricom, M-Pesa will move from being an 'unregulated’ but licensed solution owned and managed by Vodafone (UK) to a local-listed company, owned and operated in Kenya.
• April 30, 2009
• 0:04

  NIC Bank 2009 AGM

   » ‎ bankelele

  Tags:  NIC  

  The 2009 annual general meeting (AGM) of NIC Bank took place on Wednesday April 29 at the Kenyatta International Conference Centre Nairobi. (more on the background and recent performance of NIC)
  
  The Chairman JPM Ndegwa (Chairman) led the meeting which began after the Company Secretary making some housekeeping announcements – mentioning lunch would be served afterwards but members should not litter the building as they eat, asked shareholders to switch off their mobile phone (a few still rang during the meeting) and that the bank had a marketing desk where their products would be on display for shareholders to ask questions and could open share accounts
  
  Chairman Performs: The Chairman introduced the board and the management and representatives of S&F Bank of Tanzania who were seated at the side of the dais. He spoke throughout the day in a mix of English and fluent Kiswahili. He began by commenting that the 2008 AGM held at Safari Park Hotel had been quite crowded hence the move to a larger venue (bank has almost 25,000 shareholders)
  Most important was how he controlled the tempo of the meeting, by stating upfront that only relevant questions should be asked and only as related to what was being discussed or voted on at each time. The result was one of the most constructive Q&A segments I have seen, with no frivolous questions asked during the session and the meeting progressing quite rapidly
  
  Financial accounts 2008: the bank ended the year with a profit of Kshs. 1.48 pre-tax billion (~$18.5 million) and significant growth in assets deposit and loans. After the audit partner (Mr. Ndonye from Deloitte & Touche) read out their opinion, there were no questions and the accounts were approved!
  
  Dividend: a final dividend of Kshs 0.25 for a total for the year of Kshs 0.5 was approved by shareholders. The voter elicited a couple of the shareolder to as usual ask for a higher dividend to be paid than the board had recommended. Another shareholder asked that, since the dividend was meager, could they be paid a bonus share?he clearly had not read or listened to the agenda
  
  Directors fees – while you can’t compare the level of disclosure to shareholders at Stanbic (Uganda), the Chairman stated that the total sum paid to non-executive directors was Kshs 5.2 million ($65,000) – in sitting allowance for board & committee meetings. This was actually lower than the 5.36 million paid the year before last yearn and the results were plain to see. Vote was approved
  
  Auditor Re-elections: the directors recommended that Deloitte continue in the accounting roles and asked shareholders to approve that; one shareholder asked if Deloitte was the only firm considered and if so why the Central Bank (CBK is bank regulator) also had to approve the appointment of the auditors – was there a problem with Deloitte? The chairman answered that they used other audit firms, and that there were provisions that firms could not consult and audit at one company and they were quire satisfied with the work Deloitte has done. He added that Central Bank , in looking out for depositors interest, also vetted audit firms employed by banks to see that they were competent (an aside is that the recent ‘enhanced rules’ for stockbrokers don’t specify their quality of their auditors or indicate that the CMA will even vet them)
  
  Director Re-Elections: Isabella Ocholla Wilson and George Maina were re-elected as directors; so was lawyer Michael Somen who required was an extra vote since he is over the age of 70 years He’s the Chairman of Access Kenya, but it seems NIC have a habit of de-emphasizing their directors board positions on other companies
  
  Bonus share : The next motion, for NIC shareholder s to receive 1 new bonus share for each 9 they own produced the first unscripted moment of the day and the hot button issue was again - rogue stockbrokers - three different shareholders asked the same question - i.e. NIC was giving them a bonus share, which they would be forced to take to a stockbroker who may sell this shares without their knowledge, or collapse with their shares/funds. The Chairman replied NIC Bank now had their own stockbrokerage firm NIC capital Securities where their shares would be safe. The war by banks against stockbrokers is still being waged in public – and a few days ago it was Equity Bank shareholders who were being given the same message –that their shares were safer with the strong commercial banks that they know and own, rather than with some small stockbroker
  
  Purchase of 51% of S&F Bank: NIC is purchasing 51% of Savings & Finance, a Tanzanian Bank for a total cost of Kshs. 580 million (~$7.25 million). Continuing part of expansion and diversification since their 2007 rights issue that has seen them open branches in Kenya, an now make a cross-border investment ; the vote brought out the most questions of the day;
  
  Q. exchange rate change since deal was announced; why is some payment in Tanzania shillings and some in US$?
  - mix of currencies is s how the Tanzanian owners requested it be paid. - the shillings is weaker and they are now paying about 2.1x book value compared to 1.9x earlier. Also some S&F shareholders live outside Tanzania
  Q. The owners seem to be family/private individuals:
  - True most companies start with individual shareholders only - and the institutional shareholder is the East African Development Bank. S&F was started in the 1990's and it origins were in hire purchase business are similar to NIC. The shareholders with 49% are also going to be re-investing the NIC money in the banking, not taking it out.
  Q. why is the bank attractive? Is it a leading bank in Tanzania – where does it rank?
  - Tanzania has 28 banks and S&F would be between no 15 and 20. NIC felt they would get best value by acquiring a small bank and driving its growth. NIC directors did their due diligence, have observed S&F operations, got transaction advice and confidential banking reports from Tanzanian regulators confirming the bank was a good buy . It has 3 branches in Aruaha, Dar es Salaam and Mwanza which are all key trading points. MD added that - NIC was not the only suitor interested in S&F.
  Q. How will it be run?
  - S&F will have 7 board members – 4 nominated by NIC (including the MD’s post) and 3 by S&F (including the Chairman’s post - Abdulsultan Jamal). NIC have opted to retain the current Tanzanian MD – Suranjan Ghosh, Mark Bomani (former Tanzania attorney general) and Andrew Ndegwa (Kenyan NIC director) and James Macharia (Kenyan NIC managing director) as their four nominees.
  Q. Other Kenyan banks have focused on Rwanda Uganda and Sudan- why Tanzanian (which has not been receptive to other Kenyan companies
  -Chairman replied that Kenyans were the biggest investor in Tanzania (excluding the mining sector). Also in terms of diversification, the election violence of 2008 affected Kenya, Uganda and Rwanda equally - since countries were on same trade route! However Tanzania was a completely different market. A large untapped country with great agricultural and resource potential. Many NIC customers do business there already.
  Q. Deal wrap up?
  - Approval has been got from Central Banks of Kenya and Tanzania. After NIC shareholders voted to approve the deals, it is now expected to be wrapped up on Monday next week and S&F will become a subsidiary with their accounts consolidated in NIC’s from next month.
  
  Goodies: a souvenir wall clock
  
  - Smart NIC had a boxed lunch served to shareholders (much easier to manage than any buffet and needs fewer catering staff). each box had cold roast chicken piece, beef sandwich, juice, water bottle, cup cake, and an apple.
• April 28, 2009
• 9:59

  Where to Bank an Adsense Cheque in Nairobi

   » ‎ bankelele

  Tags:  adsense  

  This is a follow up post to the long-running question of what do with an adsense cheque or its’ equivalent. There are dozens of Kenyan bloggers building up small net earnings from adsense and similar web-based advertising companies – but who usually pay in US$ cheques - minimum $100 i.e. now almost Kshs 8,000 which is a tidy sum for a part time activity.
  
  The post is of interest because the costs of clearing such a cherub can run up to 50%at some banks. After the last post on the subject we had these as the cheapest banks:
  
  2. Family Bank - Kshs. 650
  3. KCB (said) minimum Ksh.800
  4. Co-op Bank - Kshs 1,000
  1. I can now add to the top of the pile Barclays Bank of Kenya who charge just Kshs 200 /= (~$2.5) the lowest so far I have verified.
  
  KCB was the only bank (out of 40) to respond to a query via the general e-mail account published by the banks. What does this say about the level of internet interaction? Very bad. There are some non-existent companies with great interactive websites, but with Kenyan banking its the opposite – some great innovative banks who put up massive website, and which, though updated often, rarely respond to to online queries and feedback.
  
  Twitter would be a nice (free) tool for them to use, but no bank has yet embraced corporate blogging, and none are on @Twitter yet. @MosesKeimbaro had a recent post on Kenyan brands on Twitter. – with the most prominent and active being @KenyaAirways. Also here's a great list of other financial sites on twitter.
• April 21, 2009
• 7:37

  New Rules for Nairobi Stockbrokers

   » ‎ bankelele

  Tags:  NSE stockbrokers  

  stockbrokers to remain hidden
  
  The Kenya Capital Markets Authority (CMA) has published new rules at its website on how they propose to regulate stockbrokers. They have also published proposed rules for Kenya real estate investment trusts – a.k.a. REIT’s as they are called.
  
  Unlike with other plublications like the Treasury Budget process or (new rules from) the Communications Commission of Kenya, the CMA is not inviting public comments or suggestions; these are finalized new rules.
  
  What they include
  
  The Capital Markets (Conduct of Business) (Market Intermediaries) Regulations, 2009
  - Intermediaries (i.e. stockbrokers / investment banks) will be required to engage in know your customer (KYC) practices (to prevent money laundering)
  - brokers will not recommend unsuitable transactions once they know profile of their customer
  - No cold calling allowed (does that happen in Kenya? Banks and insurers sometimes do that)
  - Brokers must have policies for customer confidentially, handling customer complaints,
  - Brokers barred from front running and account churning
  - Brokers must separate client funds and stockbroker funds
  - Broker employees undertake not to use information gained from clients for personal gain
  
  contentions clauses
  - Will customers really have a right to be paid interest on their funds held?
  - Will brokers prepare objective client agreements that will be signed between them and clients – and which call on them to disclose third party remuneration, conflicts of interest etc?
  
  The Capital Markets (Corporate Governance) (Market Intermediaries) Regulations, 2009
  - Each stockbroker must have board of directors, who are not children (i.e. under 25 years), and one must not be related to any other director; also the CMA will have to approve any board changes
  - new rules vest management of the broker in the board of directors on matters such as audit, risk assessment, key employee hiring & duties
  - broker to hire a compliance officer
  - broker to hire an internal auditor
  - employees to disclose securities they or their close associates own
  
  REIT rules
  
  The Capital Markets (Real Estate Investment Trusts) Regulations, 2009
  - REIT/schemes will distribute at least 90% of after tax income as dividends like in other countries
  - Scheme may borrow for investments, but these will not exceed 1/5 of total assets
  - REIT must have an independent Principal valuer to value the scheme assets. He/she must be changed every three years
  - Trust founders may not own more than 50% , and publicly listed ones may have a minimum of 100 members
  
  Summary: The CMA to be notified in advance of key events at stockbrokers; e.g. new key managers, likely changes in ownership, material pending lawsuits, auditor changes. Also, the new compliance rules make it more expensive for small stockbrokers to comply; this may force them to merge or seek new shareholders.
  
  Stockbrokers will however remain hidden as their disclosure requirements remain only to the CMA even on the basic issue of sharing financial returns with the public; stockbrokers are required to prepare only annual balance sheets and profit & loss statements using IFRS; but these they will only be shared with the CMA – not published for the public. Contrastingly , the rules are lenient for stockbrokers and harsher for REIT’s who will publish its (quarterly) un-audited financial results in at least two national daily newspapers of national circulation. REIT’s are also required to employ auditors recognized by the institute of certified public accountants of Kenya (ICPAK), but that does not apply to stockbrokers whose auditor qualifications are not spelt out. why not?
• April 20, 2009
• 9:03

  Reading the Barclays Tea Leaves

   » ‎ bankelele

  Tags:  NSSF Kenya  

  Barclays Kenya just published their 2008 annual report; what does some interesting points about the banking sector.
  
  
  Barclays Peek
  - Is the second largest bank in Kenya behind KCB, but still tops in profit – with Kshs 8 billion ($100 million) before tax. Has 126 billion ($1.58 billion) in deposits, loans of 108 billion ($1.35 billion) and total assets of 168.5 billion shillings. It would probably reclaim the number one status from KCB, but KCB shareholders will next month absorb the assets of S&L, their mortgage subsidiary
  - Shariah Banking Barclays launched La Riba in 2008 – and in 2008 they managed to mobilize over 2 billion in new la riba deposits to stand at 3.3 billion ($41 million) at end of year, but gave out just 19 million in loans
  - Customers They have a popular Business club – with over 10,000 members some of whom were flown to Dubai, China and Holland. Barclays had 930,000 customers in 2008 (2007 was 580,000) – compared to Equity Bank’s 3.3 million customers, and 60,917 shareholder 60, 917 (up from 58,945 in 07)
  - Staff cutback? Employees in 2008 reduced by 16% - as group had 5,571 at December 08 compared to 6,900 in December 07. In 06 they had 2,197 (but it appears in 2008, they shed the part time staff whose numbers reduced from 4115 to 1698)
  - No thanks Agriculture. Agriculture is referred to as the backbone of Kenya’s economy7, but Barclays estimate their exposure to the sector to be just 1% of loans. Private industries account for 44%, with 10% each to manufacturing and to transport & communications sectors.
  - Asset finance reduced?? Assets under financial lease decreased slightly – still at 6.1 billion
  - Gloabl crisis / External Impact? a 1% or decrease in interest rates would impact profit about 5%, but there’s no impact from strength/weakness of Kenya shilling (bank only does business in Kenya)
  - Directors: the three directors who were appointed at previous times are up for re-election on May 15; Brown Ondengo (2003), Jane karuku (2003), and Paul Phemngorem (1998). Barclays (UK) parent, with 68.5% of the vote, will pretty much determine who will remain or leave the board. No other shareholder has more than 1%, with the next largest being Kenya’s national social security fund (NSSF) with 2%
  - Cheaper to borrow overseas than the NSE: The bank received subordinated debt in the form of a tranche of NSE listed bonds of 2 billion shillings (3,078b) repayable over 5 years – at 10.36%. They also borrowed 1.25 billion from their Barclays parent; BBK in the form of a 10 year loan at just 2.39%
  - Pension Funds gloomy outlook The Barclays staff pension scheme with 44% equity investments was down 13% in value (to Kshs 7 billion), compared to a gain of 6% in 07
• April 17, 2009
• 1:16

  Ugandan Envy

   » ‎ bankelele

  Tags:  Corporate governance  

  this is NOT about Migingo Island
  
  Google Earth image courtesy of afromusing
  
  A year ago wrote this on the information availed to Ugandan investors by their companies; this year the envy is even more, it makes me sad; that by being the leading country in the region, we may not notice we are being passed in some aspects of investor awareness & rights.
  
  Use of E-Mail: The Stanbic Uganda invitation/AGM notice again arrived by e-mail; now many Kenyan companies have passed by-laws allowing them to send out e-mail notices and annual reports to shareholders, but none has done so far. Maybe, with the eventual passage of the much maligned/controversial communications bill the legal framework is now there to back enable this – but we’ll see; While not every shareholder will have an e-mail account, if 1/4 of 1/3 of some company’s shareholders (Kengen, Co-Op, Safaricom) do, then these companies could potentially saves millions of shillings in postage costs.
  
  Investor Disclosures:
  (i) For Stanbic UG, rules of voting are clearly stated – shareholders are to endorse new directors and that 1/3 of directors will retire at each meeting.
  (ii) for directors who are up for election, their mini-CV’s are printed out for all to peruse i.e. their ages, year of appointment, educational qualifications, directorships in other companies, and committee seats they. In Kenya, Company Chairmen just mumble through, if at all, fully expecting elections to be a foregone conclusion. Refreshingly here, the directors up for election at Stanbic Uganda (Hannington Karuhanga, Kitili Mbathi, and Samuel Sejjakka) are all younger than 50 years. In Kenya, opportunities for younger leaders & directors are the exception rather than the rule. But at Stanbic Uganda - the Chairman and Deputy Chairman have their tenure is capped at two terms of 5 years only.
  (iii) Remuneration of directors is declared. Again in Kenya money amounts paid to directors are rarely mentioned, but in Uganda they are spelt out for shareholders to approve – here the Company (non executive) Chairman gets an annual retainer of US$7,500 while a director gets US$5,500
  
  Language used; several companies (most recently) KCB have amended their company article to allow for electronic communication with clients; but they merely replace one of gibberish with another one, without bothering to explain what the jargon means. Here; Stanbic explain allows video-conferencing or tele-conferencing to be used at board meetings
  
  Proxy detail proxy forms contain a lot more details including the items to be voted for with shareholder able to vote for or abstain on votes. They also call for shareholders to provide contact details (name, e-mail – what an easy way for a company registrar to build up a working database to manage is subsequent years)
  
  Shareholders or their proxies (who can be more than one)are entitles to attend, speak, and vote, and the endorsement /presence of a proxy does not disqualify a shareholder from attending; this enables a shareholder to bring his wife/wives or children for them to learn about the process!
  
  ==
  
  Investor guides: There are many things to learn from other countries in the region on investor rights and information despite Kenya being the leader. We are innovative, Uganda is about to unveil a CDSC system that Kenyan investors have had for three years, but which rogue stockbroker have besmirched. It would not be surprising if the Ugandan version may be sorted out ahead of time, closing loopholes that will be used to protect shareholders, and by educating them on how the system works.
  
  All the regional exchanges – Kenya, Tanzania, Uganda, and soon Rwanda (where KCB, Kenya’s largest bank in Kenya will be the first company to have its shares to be (cross) listed & trading) all have the same information; but my NSE seems stale, like all the regulations were put up years ago and forgotten. Usualy we just check for the latest share trades, bond trades and quarterly financial announcements.
  
  e.g. Faced with a budget deficit, Kenya has lowered the minimum amounts to invest in bonds to Kshs. 50,000 ($625). The Central Bank of Kenya which issues these bonds has put up some investor information basics, but nothing from the NSE who trade in these bonds. In Uganda, there is an advisory page for investor guides for bonds and shares, for any new investor to read, download for free.
  
  Also in Kenya , tribe is the unacknowledged elephant in the room; one we pretend to not be influenced by, but which governs many aspects of our lives. Kenyans are required to communicate official in English (almost all government documents), and to a lesser extent in Kiswahili. But there are rural folk who may not understand the national or official language, but may wish to learn about shares and bond Uganda has investor awareness booklets in vernacular languages – including a Luo investor guide (PDF)(for the Northern Region) available from the Uganda Securities Exchange. And that, properly disseminated, may be worth much more than a small island.
• April 15, 2009
• 5:31

  NIC Soars

   » ‎ bankelele

  Tags:  NIC  

  The NIC bank AGM will be held of April 29. The company has 24,000 shareholders up from 20,000, and while the top 10 shareholders remain unchanged, they are in for the long haul in the bank which is diversifying its business strategy as a re-branded NIC that aims to be a regional giant.
  
  
  
  - NIC is now into banc assurance – through NIC insurance agents which partners with two leading insurance companies and had a modest profit in 2008
  - NIC acquired 58% of Solid Stockbrokers and has now upped its stake to 88.3% through new capital and buying out other shareholders. The cost so far is about Kshs. 423 million and it made a 2008 profit of Kshs. 5.2 million. The brokerage and investment firms are capitalized at 349 million and 219 million well above the 30 million and 50 million minimums set by the capital markets authority (CMA). Also, legal claims brought by customers of Solid and which NIC inherited in the deal are pegged at Kshs 84 million.
  - NIC also plans to complete a deal to acquire 51% of a Tanzanian Bank - Savings & Finance Commercial Bank by 30 April 2009 at a cost of Kshs. 322 million. S&F has in 2007 the equivalent of of Kshs 2.37 billion in assets,with deposits of Kshs 2 billion and loans of Kshs 1.3 billion and pre-tax profit of Kshs. 77 million.
• 4:50

  TrackIt Overkill

   » ‎ bankelele

  Tags:  Corporate governance  

  KTN have been carrying a sensational three part series on car robberies, with a focus on Track-It. This is a company that installs tracking devices in cars to trace their location if reported as stolen and enable the car to be be recovered by either the company or police
  
  
  
  For heavily stolen cars, tracking devices are recommended for owners. Some banks and insurance companies may even insist that they are installed as part of financial contracts. Fleet owners also appreciate using the devices which can assist in fleet management and monitoring
  
  It’s a well researches story, they even obtained a list of alleged track-it customers including three members of parliament, who volunteered for their cars to be ripped apart and checked for the devices, which were apparently not found (KTN reported they found devices in just 50% of the cars they checked)
  
  The saga has played out in an even more sordid as the managing director of that company was recorded on camera offering to bribe the journalists with about $12,000 after admitting it was true that his company had not installed tracking devices in some cars, despite charging their owners 45,000 ~ $560. The devices are small electronic units that are hidden, so that even car thieves won’t know
  
  KTN have led with the story three nights in a row, Nairobi, but is it overkill? urely there are more pressing matters that can be covered in the news. The car theft story has led ahead of political and other events of the day.
  
  Car theft is not a new thing; car jacking have been covered, bus passengers are robbed or terrorized, chopped up cars are fund in agricultural fields and industrial sheds every other week. To spin this story out of three prime time nights is over kill.
  
  Also over looked in the story, and a fact alluded to by the embattled Trackit owner is business competition in the story in the business competition. The owners of the standard/KTN may also be linked to a rival company, industry leader - Cartrack. It would be unsual to KTN to acknopwlede a corporate link, but if thers’s one it should be stated. Maybe it would have been better if another media house e.g. NTV had broken this story, but I doubt if they would have made it a three day special.
  
  e.g. Intel recently posted a query on @twitter on which of the two companies to subscribe to. But after this story is completed and based on the behavior of the Track it boss, that company is finished.
• April 09, 2009
• 10:08

  Mostly Equity – Suspensions & Housing Evictions

   » ‎ bankelele

  Tags:  HFCK  

  
  
  Equity suspended: Equity Bank was briefly suspended as a Central Depository Agent by the Central Depository & Settlement Corporation (CDSC). They have smartly escaped unscathed without answering any charges owing to:
  - Playing one regulator against another the. The Capital Markets Authority (CMA) immediately reversed the ban, and reinstated Equity while terming the CDSC action as being against procedure
  - By invoking the ‘small investor’ Equity said that they were in trouble because they had reached out to the small investor, lending them funds to buy Safaricom shares without collateral, and some people did not like that
  
  Lost in the story is
  - Equity split shares were supposed to start trading on April 14, but have been trading as split prices and have appreciated about 40% since the announcement
  - The spat makes the CMA and CDSC look bad; by having a turf war (PDF) and fighting in public both claiming to fight for the integrity or interest of investors
  - Why won’t Equity pay the minuscule amount or respond to the regulator (CDSC)?
  - Comments made by the CEO at the bank AGM, bragging having the most investor accounts in the country coming back to haunt at a time when brokers are (i) broke (ii) resentful/envious
  - More tales at the stockskenya forum
  
  Equity moves in at Housing Finance: At Housing Finance, Equity is asserting its authority at the bank and Equity directors will now form 1/3 of the Housing Board of Directors, with Peter Munga (Equity chairman) Benson Wairegi (Equity vice chairman) and Babatunde Soyoye (Helios) all appointed in 2008 and who will all be ratified by Housing Finance shareholders this month.
  
  During the 2008 rights issue at Housing Finance, Equity also increased their ownership stake from 20% to 24.9% while sister institution British American Investments (Britak) also increased from 4.9% to 7.5%. The rights issue also saw the National Social Security Fund reduce stake from 7.8% to 6.8% as the Government of Kenya which did not take up any new shares saw its stake reduce from 7.3% to 3.6%
  
  Opportunities
  
  Free Download Githongo Book - The most talked about book in Kenya - It's Our Turn to Eat - the Story of a Kenyan Whistle-Blower (John Githongo) by Michela Wrong will be available for download from April 10. yes you probably have a bootleg copy, but this is the real one from the publisher
  
  - Invest in a Government of Kenya Bond to raise 10, billion shillings ($125 million), and earn a potential 10% bond return (PDF); minimum application amount is 50,000 ($625), and the offer closes 22 April. (better than Madoff?)
  
  - Maker Faire Africa (MFA), a celebration of African ingenuity, innovation and invention, will take place August 13-15 at the Ghana-India Kofi Annan Centre of Excellence in ICT in Ghana's capital, Accra there are opportunities to sponsor the summit
  
  - Jitihada is the Kenya National Business Plan Competition – (details) (PDF) that will be launched in mid-April.
  
  Create a Logo for an international mobile banking conference and win $200. Details here, found at @whiteafrican
  
  Jobs
  - Old mutual: Broker distribution manager, Mass market manager. Apply to recruitment@oldmutualkenya.com by 17/4
  - National social security fund managing trustee. apply through manpower associates by 26/4
  - Capital Markets Authority: Assistant Manager (Legal Framework), Accountant, Assistant Manager (Investigations), Manager (ICT). D/L is 15 April
• April 05, 2009
• 2:57

  Easter Reading

   » ‎ bankelele

  Tags:  Twitter  

  Kenyan Blogs to Read this Easter
  
  Been a busy week, with a bit of travel, a lot of sports to watch and not much time to blog, so here are a couple of posts of note from the last week from friends and online colleagues.
  
  Ka-investor explains the beauty of Twitter - it is simple, accessible from anywhere, via mobile phone, but which may take away some effort from doing full blog posts (and I’m guilty of that as well @bankelele)
  
  Maishinski explains how to make money in a recession e.g. buy cows cheaply because of the drought
  
  This was a week of shocking layoff announcements, from Zain-Kenya (#2 mobile company) and even giant brewer - East African Breweries, and some more layoff perspectives from Grains of Masala. However senior Kenya government workers are immune from the wave, as explained by Coldtusker
  
  The Kenya Capital investment group has another corporate earnings round -up, as Equity Bank shares begin another curious ride that their CEO prophesied last month after the share split.
  
  The creation of new districts (administrative politicAL/government territories) appears to be an expensive futile exercise at the Nairobi Chronicle reports.
  
  Finally, a rant by Kahenya becomes one of the most revealing posts on how lack of regulation in the communications sector stifles investments and profitability . I am also listed as a trouble maker owing to my links to Google
• April 02, 2009
• 1:22

  Kenya Bank Rankings 2008 Part II

   » ‎ bankelele

  Tags:  Family Finance  

  Follow up to part I and tracks change from December 2007 to 2008 in assets and profits
  
  Tier 1 (Assets over 25 billion shillings)
  1 KCB (2) 174,712-assests (Kshs. 175 billion, $2.18 billion) 5,394 million ($67million)-profits 109,845-deposits 79,343-Loans (assets up 55%, profits up40 %, overtake Barclays to be No. 1)
  2 Barclays (1) 168,786-a 8,016-p 126,408-d 108,086-L (assets up 7%, profits up 13 %)
  3 Standard Chartered (3) 99,140-a 4,709-p 76,898-d 43,299-L 8% (assets up 8%, profits down 4 %)
  4 Cooperative (4) 83,918-a 3,337-p 65,934-d 53,293-L (assets up 28%, profits up 46 %)
  5 (--) CFC Stanbic 83,166-a 1,313-p 61,529-d 44,205-L (new bank created by merger combined assets up 34%)
  6 Equity (6) 77,135-a 4,757-p 48,977-d 40,858-L (assets up 45%, profits up 101%)
  7 Commercial Bank of Africa (8) 50110-a 1694-p 41715-d 26309-L (assets up 27%, profits up 21%)
  8 Citibank Kenya (6) 47534-a 3353-p 31192-d 18154-L (assets unchanged, profits up 89%)
  9 NIC (10) 42,704-a 1,474-p 35,238-d 29,955-L (assets up 36%, profits up 41%)
  10National Bank of Kenya (7) 42,696-a 1,797-p 34,278-d 8,950-L L (assets up 3%, profits up 11%)
  11 Diamond Trust (11) 41,592-a 1,336-p 32,689-d 25,460-L (assets up 37%, profits up 44%)
  12 Investment & Mortgages (12) 36,656-a 1,620-p 28,355-d 25,887-L (assets up 25%, profits up 25%)
  
  Tier 2 (Assets of 6 – 24.9 billion)
  13Prime (15) 19,945 million-assets (~$249 million or Kshs 19.95 billion) 460 million-profits (~$5.75 million) 15,662 million-deposits 9,426 million-Loans (assets up 44%, profits up 45%)
  14Housing Finance (17) 14,330-a 196-p 10,089-d 10,419-L (assets up 38%, profits up 50%)
  15 Imperial (16) 13,432-a 673-p 10,414-d 8,276-L (assets up 15%, profit up 19%)
  16 Bank of Africa (23) 12304-a 93-p 8708-d 6856-L (assets up 61%, profit down 41%)
  17 Bank of India (18) 12049-a 609-p 10211-d 4448-L (assets up 16%, profit up28 %)
  18 Ecobank (19) 10499-a 67-p 8341-d 5126-l (assets up 11%, profit down 43%)
  19 Family Bank (20) 10,410-a 531-p 7,404-d 5,890-L (assets up 21%, profit up 99%)
  20 Baroda (14) 10361 633 15165 8938 (assets down 30% %, profit up 27%)
  21 Chase (27) 10,300-a 247-p 7147-d 5139-L (assets up 80%, profit up 37%)
  22 Fina (21) 9,865-a 82-p 8,113-d 6,190-L (assets up 22%, profit down 29 %)
  23 K-Rep (24) 8,184-a -472(p) 4,502-d 5,935-L (assets up16 %, slipped to loss maker)
  24 ABC (26) 6584-a 224-p 5365-d 3550-L (assets up 7%, profit up 21%)
  25 Habib AG Zurich (25) 6,557-a 242-p 5,373-d 2,182-L (assets up 6%, profit up 19%)
  26 Development Bank of Kenya (32) 6,520-a 171-p 2231-d 3439-L (assets up 39%, profit up 9%)
  
  Tier 3 (assets below 6 billion shillings)
  27 Giro (28) 5,938 million-assets (~$74 million, Kshs 5.93 billion) 126 million-profits (~$1.6million) 5,127 million deposits 3,411 million-Loans (assets up 6%, improved profit up 207%)
  28 Guardian (29) 5,558-a 44-p 4,586-d 3,553-L (assets up 3%, improved profit up 84%)
  29 Southern Credit (30) 5,171-a 6-p 4,106-d 2,655-L (assets down 6%, profit down 85%)
  30 (--) Gulf African 5,000-a -382(p)3,249-d 1,932-L (new Shariah bank)
  31 Consolidated (34) 4,657-a 85-p 3,279-d 2,751-L (asset up 13%, improved profits up 226%)
  32 Habib Bank (35) 4,491-a 146-p 3024-d 988-L (assets up 17%, profit up 37%)
  33 Victoria (33) 4,460-a 170-p 3,582-d 2,778-L (assets up %, profit up %)
  34 Equatorial (31) 4410-a -8(p) 3668-d 2307-l (assets down 9%, slipped to loss maker)
  35 Fidelity (38) 4,329-a 73-p 3,778-d 2,787-L (assets up 39%, profit up 62%)
  36 Credit (36) 3,637-a 79-p 2774-d 1810-L (assets up 8%, profit down 40%)
  37 Transnational (37) 3,414-a 121-p 1,891-d 1,441-L (assets up 6%, profit up 43%)
  38 Middle East (39) 3,297-a 30-p 2,021-d 1,651-L (assets up 6%, profit down 68%)
  39 (--) First Community 3,180-a -307(p) 2091-d 868-l (new Shariah bank)
  40 Paramount Universal (40) 2,646-a 51-p 2,109-d 1,268-l (assets up 12%, profit up 19%)
  41 Oriental (41) 2,289-a 68-p 1,314-d 958-L (assets up 35%)
  42 Dubai (42) 1,639-a 7-p 1,032-d 957-L (assets up 6%, profit down 50%)
  43 (43) City Finance 538 -a -3(p) 164 -d 193-L (assets down 28%, 90% financial improvement to report loss of 3m)
• March 31, 2009
• 4:54

  Google Launches Local Maps Domain for Kenya

   » ‎ bankelele

  Tags:  Wikipedia  

  On March 31, 2009 Google launched the local domain for Google Maps in Kenya, - an interactive map with many features and business listings.
  
  Some Features
  - Users can add locations to their own my maps (Local celebrities have contributed (Wangari Mathai, Churchill, and Julie Gichuru)
  - Content can be added to maps by individuals such as photos of place, restaurant reviews, hotel information (no. of rooms, visa card accepted) and Wikipedia entries
  - Photos that have coordinates can be over-laid
  Business owners can add their business locations and details
  - Collaborate users can share information and invite select others to contribute on parties, events, add maps and event-related information
  - Privacy information can be designated as private of public (search engine accessible)
  - Local websites can embed google maps by simply by adding some code
  - Mobile phone same features for kenya also accesible via Google Maps for Mobile - like search, driving directions, show traffic, favorites, and my location
  - Mapmaker: Tool can be enhanced with google mapmaker
  - All these are Free
  
  Other Mapping Events
  - March 31 Skunkworks Tuesday at KCCT Teleposta Towers 4th Floor, from 5.45 pm. A talk by Dennis Karanja, Regional Director EA Sybase, a mobile phone application development company.
  - More developer workshops being held today @Google
  - Google will also sponsor Where Camp Africa on Saturday April 4
• 1:46

  Kenya Bank Rankings 2008

   » ‎ bankelele

  Tags:  Coop  

  Top 10 banks at December 2008
  
  Assets
  1. KCB (rank last year - 2) Kshs. 174.7 billion (~$2.19) billion
  2 Barclays (1) 168.8b
  3 Standard Chartered (3) 99.14b
  4 Cooperative (5) 83.9b
  5 CFC Stanbic (4) 83.2b
  6 Equity (6) 77.2b
  7 Commercial Bank of Africa (7) 50.1b
  8 Citibank Kenya (8) 47.5b
  9 NIC (10) 42.7b
  10 National Bank of Kenya (9) 42.7b
  Then Diamond Trust, Investment & Mortgages, Prime, Housing Finance, Imperial
  
  Profits
  1. Barclays Kshs 8.0 billion (~$100 million)
  2. KCB 5.39b
  3. Equity 4.76b
  4 Standard Chartered 4.7b
  5. Citibank Kenya 3.35b
  Then Cooperative 3.33b, National Bank of Kenya 1.8b, Commercial Bank of Africa 1.7b, Investment & Mortgages 1.62b, NIC 1.47b
  
  Deposits
  1. Barclays Kshs. 126.4 billion (~$1.58 billion)
  2. KCB 109.8b
  3. Standard Chartered 76.9b
  4. Cooperative 65.9b
  5. CFC Stanbic 61.5b
  Then Equity 50b, Commercial Bank of Africa 41.8b, NIC 35.2b, National Bank of Kenya 34.3b, Diamond Trust 32.7b
  
  Loans
  1. Barclays Kshs 108 billion (~$1.35 billion)
  2. KCB 79.3b
  3. Cooperative 53.3b
  4. CFC Stanbic 44.2b
  5. Standard Chartered 43.3b
  Then Equity 40.9b, NIC 30b, Commercial Bank of Africa 26.3b, Investment & Mortgages 25.9b, Diamond Trust 25.4b
  Source: from published audited accounts for 2008
• March 28, 2009
• 1:54

  Rea Vipingo 2009 AGM

   » ‎ bankelele

  Tags:  NSE investor awareness  

  Nairobi Stock Exchange listed Rea Vipingo Plantations Limited and one of leading producers of sisal held’s its’ 2009 annual general meeting on March 27 2009 at the Panafric Hotel Nairobi
  
  Meeting started at 11 a.m. sharp with a short video shown about the company explaining more about its background and what it does - Created by an amalgamation of companies in 2003 that acquired more estates in Tanzania in 1995, got listed on the NSE in 1996. Since it was listed sales have grown from Kshs 537 million to Kshs 1.2 billion and production is now at 17,000 tons per annum
  
  The meeting led by company chairman Oliver Fowler went straight into shareholder questions immediately after the video
  
  Professional shareholder alois chami stood to ask a question (he’s at every AGM and always asks a couple of inane questions – virtually all company chairmen & secretaries know him by name) – but his mobile phone went off and he had to sit and answer it about a half dozen phones go off at every meeting, and some shareholders magnify this discourtesy by answering the calls
  
  how the company’s’ performance was in 2009? Chairman said it was quit good, maintained their markets, still getting good buys from China, while the weak shilling/strong $ has also helped them
  
  impact of the global economic crisis? performance still good as company has good cash position, scaled back capital expenditure and made some cutbacks. Still they can’t predict how the sisal industry will perform and are also nervous
  
  competition from petrol twine versus their sisal twine (the price of oil is 1/3 of what it was a year ago). Chairman said their primary competition, was not from synthetic twine, but from other sisal produces – as they were all competing for a diminishing pool of customers
  
  if company doing well, why reduce dividend? (from Kshs 0.8 per share in 2007 to 0.2 in 2008) Chairman said at the time of the decision, they actually intended to pay no dividend since the outlook was so grim (and wanted to conserve cash), but since they got some contracts, decided to make a modest payment
  
  does low share cap hinder borrowing?no it does not, their borrowing is quite low considering the value of the company’s assets and which bankers look at more. Their facilities are up fro renewal next month, but don’t expect any hitches
  
  how much are contingent liabilities? (no figure was indicated) chairman said they would be mostly for industrial claims covered by workmen compensation and there were no material claims of substance
  
  no logo/signature by directors & auditors in the published accounts Chairman assured shareholders that they had been signed and the auditors had signed and the accounts could be verified a their office or the company registry (Chami got his act together and asked this, he was later brushed aside by another shareholder when he kept hammering this trivial point)
  
  subsidiaries part of profit came from fair value gain (a book profit, not actual profit) as well as from revaluation of biological assets
  
  does having a golf course add value to the company? Chairman took a moment do correct a misunderstanding that is occasionally repeated in media and the company Rea Vipingo is not the developing real estate or golf courses in Vipingo, Kwale (Coast Province) it is being done by another company adjacent to the sisal estate (and while they were all part of the original sisal estate – the land that was not suited for sisal production (sandy beach) is being used by the other company)
  
  what does company do for CSR? Company engages in corporate social responsibility – staff are housed at sisal estates in Kenya and Tanzania and receive medical care while children are schooled in nursery and primary school on estate, with some getting scholarships to high school . they have in the past been involved in famine relief and distribution in Makueni district, but in 2009 the government has not requested their assistance
  
  dry season affect sisal? sisal is drought resistant, but prolonged dry season can affect production
  
  bank borrowing chairman was asked, but explained they had take some foreign loans, and one from a supplier (Wigglesworth) since they were a lower rates than bank loans
  
  director elections after 12 years of service director Musa Sang retired from the company board during the year and he was replaced by Brown Ondego (chairman of rift valley railways, and former MD of Kenya ports authority). shareholders confirmed his election, but also (again) asked to consider getting (i) female directors and (ii) younger directors (these will being new skill like ICT to c company which did not have a website till a few years ago)
  
  hot button moment director allowances in asking the shareholders to approve non-executive directors remuneration for 2009, the chairman mention that they will rise by 10% - from Kshs 30,000 per month to Kshs 33,000 per month (~$400). Some shareholder briefly protested that their dividend was being cut while directors get paid more, and that the directors’ increase should also wait till the economy and company’s performance improved. The board poorly defended this matter, but it was passed without much interruption
  
  special business shareholders approved the board decision to purchase an additional 330 hectares for sisal production from vipingo estates limited (VEL)
  
  goodies one shareholder stood and complained that the company had NEVER given shareholders a token item of appreciation, unlike other companies, and the chairman said they would once, performance improves. Tea and snacks were served outside by the pool, but it was a mad scramble that left many unhappy as the bitings were finished by the early grabber
  
  networking had a nice chat with Coldtusker and Ryan Shen Hoover while this was going on
• March 27, 2009
• 0:33

  Equity Bank 2009 AGM

   » ‎ bankelele

  Tags:  NSE stockbrokers  

  Equity Bank 2009 AGM (it’s 5th) was held at the Kenyatta International Conference Centre on Thursday March 26. This capped another year of spectacular performance by the bank during an otherwise difficult 2008 US$1 = Kshs 80
  
  
  
  Start on time? Last Equity forum was 45 min late: this one was scheduled to start at 10 a.m. and was late by about the same delay. Last time we were entertained by an entire Boney M album, this time it was a series of advertisements for the bank, with a patriotic them recalling images of tourist splendor (majestic Mara), agricultural potential and athletic achievements (Kipchoge Keino, safari rally, safari sevens rugby) all ending with the line we are proud to be Kenyan
  
  The main speakers of the day were Peter Munga (Chairman – Chair), James Mwangi CEO and Mary Wamae (Company Secretary)
  
  The Chairman took up a long time by reading his entire written speech – almost 20 minutes. He handed over to the CEO who also ran down a series of financial highlights for the year including;
  
  - Market capitalization rose in 2008 from 54 billion to 66 billion (only NSE company whose shares appreciated in 2008 - by 3%)
  - Earning per share up from 6.9 to 10.6 - and dividend per share also up 50% from 2 to 3
  - Cost to income ratio unchanged at 60%, and down from almost 80 four years ago
  - Helios investment (sale of 25% for 11 billion) was the smartest thing the board did – gave the bank the capital & muscle to grow. With their 19 billion capital and subordinated debt of 6 billion gave the bank 27 billion of capital (most cap bank)
  - Opened 35% branches, installed 150 ATM’s
  
  Speech also took about 20 min as he added:
  - All the awards the bank won in 2008 (Euro money, Africa Investor) which were on display for good measure
  - The bank is a case study at Columbia, Harvard, Stanford, IESE and Lagos
  
  The company’s secretary also read out the report of the directors never seen that happen
  
  Fun stuff at AGM's is always the Q&A with shareholders:
  
  Bad blood in banking sector one shareholder commended the bank for the fight-back in his area (Machakos) where a rumors led to a run at the branch, and a team (with cash) visited to reassure residents that the bank was strong. The bad blood was attributed to competitors who are jealous of Equity’s bank success - CEO mentioned a proverb of a tress that grows taller than the forest canopy and then gets buffeted by winds from all directions. He said they can withstands such challenges because of (i) capital of almost 27 billion (ii) liquidity of almost 66% and (iii) good asset quality
  
  Why borrow foreign funds? one shareholder asked why the bank borrowed. The lines provide long-term funds for long term lending 3-5 years). E.g. a German loan was to support investment in irrigation schemes, of which there are now 3. CEO assured the shareholders that the loans from (Dutch, French, and German institutions) were all denominated and would be repaid in Kenya shillings, cushioning the bank from exchange losses
  
  Most generous company in Kenya one shareholder asked why the company did not publicly participate in corporate social responsibility (CSR) programs? CEO said that Equity, unlike other companies, which gave a little money with a lot of publicity, was actually the biggest corporate spender in Kenya – bigger even than the Telco’s (Safaricom?, Zain?) and gave some examples
  – when they opened 4 branches in Nyanza in 2008, they donated 20,000 beehives to women’s group’s as well as 10,000 avocado seedlings –avocado’s and honey were the most promising products of the region (i.e. beehive can generate 36,000 to 48,000 annually) .
  – in Eastern province, they donated sorghum seeds to the residents of Ukambani – and will partner with east African breweries (EABL) to ensure that harvest from the residents will be bough by the beer giant.
  – In the education sector they sponsored 186 top performing high school student by paying their university fees at a cost of 112 million shillings
  – Fanikisha loans (to women groups) has become their flagship product with over 187,000 loans, and in agriculture disbursed 70,000 new loans in 2008
  This kind of CSR that Equity engages in, is not publicity, but it is actually sustainable and transform lives by giving individuals the power to generate incomes
  
  Regional diversification Uganda was a takeover, Sudan is a green field and they will watch the growth to see which strategy is better for expansion to other African countries.
  - Uganda starts operations at end of March with 30 branches (the biggest branch network in Uganda), and open another 20 this year – he said they had already increased profit by 100 in the second half of 2008 since they took over, even while doing a re-brand operation. CEO said Uganda had better growth prospects than Kenya which had a lot of negative politics
  - Sudan starts in April
  slip of the tongue? CEO at one point said … “...when we open in South Africa” while also mentioning looking at Rwanda and Tanzania as being next
  
  Buy other Banks? one shareholder asked that they buy up more shares in housing finance, while another suggested they also buy up National Bank of Kenya in which the government is offloading more shares. CEO said they would do their due diligence on NBK and if they were announced as being in the running, shareholders would know soon, but if not, then there was something they did not like after their analysis of NBK (as far back as 2005, Equity have been interested in NBK). CEO mentioned that RBS of Scotland took over a bank before the economic crisis, and choked on that toxic investment that has reduced its value to a mere fraction (from $119 billion to $3 billion)
  
  Enough bad loan provisions? these increased from 600 million to 1 billion, but was that enough one shareholder asked, considering that some of these were for Safaricom shares? CEO said they lent individual 80% for Safaricom shares with investor paying 20%, then the over-subscribed IPO allocated just 21% (which the investor paid or), and so the 1% loan was repaid in the first week
  
  Poor bank netwoek systems one shareholder complained about the downtime of the bank’s IT systems – at branches or at ATM’s which perhaps led to people saying the bank was shaky. CEO said they have been upgrading the platform over the last few weeks and it has caused some hiccups but they would be over. Equity is now branchless, you can bank in Kenya, Uganda, and Sudan seamlessly. Also look for new branches as queues and crowds will no longer be an issue
  
  Kenya immune from global crisis? CEO said in year 2000, Kenya economy shrunk by 2% while equity grew by 100%
  - stock market dipped in 2008 as foreign investors (who constitute 70% of trading) left the NSE, but they are now coming back
  - said Kenyans were being scared. there are no toxic loans in the sector. If Kenyan economy get by 2.8 in 2008 and is expected to grow by 3.6% in 2009 , and even though tourist number and export will be affected, overall we should not unnecessarily panic about... except in the capital markets
  
  Argument against being a stock-broker one shareholder asked why they did not buy a stockbroker like NIC (bought Solid stockbrokers) and yesterday Coop bank (bought into Bob Matthews stockbroker)? CEO said that not going to happen as stockbrokers have such bad reputations and toxic assets. Equity already has a custodial license, they already employ 8 stockbrokers, and get 70% of the transactional income – so why the need to become a broker? They get the profit now, without the hassle
  - said as custodian, they are the largest custodial account holder with over 50% of all CDS accounts in Kenya
  - he exhorted all shareholders to transfer their shares from their stockbrokers to Equity Bank.
  
  Shareholder votes
  - first and final dividend for the year of Kshs. 3 per ordinary share of Kshs. 5
  - Election of directors: Ernest nzovu was re-elected while Dr Ezekiel Alembi (of Kenyatta University) and Professor Shem migot- Adholla (former GoK dream team PS) were elected as new directors. The Chairman mentioned that Peter njeru Gachuba (Africap) and Linus Gitahi (CEO Nation media Group) had retired to make way for the new directors.
  
  Share split
  can’t be selfish when doing well
  - Special Business was the share split that every ordinary share be sub-divided into ten shares
  - CEO explained that shares had become too expensive at the Nairobi Stock Exchange, which made it difficult for shareholders to judge their true values. E.g. to buy minimum 100 shares of equity costs 12,700 while to buy KCB costs 1,700 and co-op just 610 shillings
  - company has 10,000 shareholders and 3.5 million customers. The share split will enable more customers to become shareholders
  CEO gave history of bonuses and splits
  i Year 2000: share split- 1 share sub-divided into 4
  ii 2004 bonus - 5 bonus shares for each one held
  iii 2007 bonus - 3 bonus shares for one held
  iv 2009 split - 1 share split into 10
  - so if you had one share in 2000 worth 20 shillings, that share was now worth 7,500
  - the register closed yesterday (march 25) and the new shares start trading on May 25
  - CEO exhorted shareholders to hold on to their shares, as they could be expected to go from the current 13 (130) to 34 (340 was the previous high before the bear market)
  
  
  Odd moments
  - Managers and board were asked stand and bow to the shareholders
  - CEO was at one time referred to as chief servant
  - CEO seemed to delight in the woes of citi bank and the US banking sector
  - Meeting started and closed with a positive prayer by Canon (priest) who obviously must be a shareholder too.
  
  Goodies
  Buffet snacks served outside by safari park catering staff tea/soda – with samosas, cake, fish fingers, croissants,
  
  Summary
  Nice AGM. Equity is now media savvy and the event was well attended and covered articulately by the press
• March 21, 2009
• 8:40

  Difficulties Changing Nairobi Stockbrokers

   » ‎ bankelele

  Tags:  NSE stockbrokers  

  Stockbrokers are falling at the rate of almost two a year, and tales continue to abound.
  
  The reality is that, sooner or later, you may need to change your broker and while I've had this post for over three years about how simples the process of transferring shares from one broker to another should be, the reality is very different!
  
  Kenyan shareholders have had the option not having share certificates for a few years now. With a central depository system (CDS), you surrender your share certificates e.g 1,000 Kenya airways (KQ), and in exchange get an electronic account/statement which is updated each time you buy or sell, shares. You also get all your dividends and annual reports by mail.
  
  Still to buy and sell shares you have to go through a stockbroker, who ideally should have the same tally as your CDS statement. Recently problems have been had with rogue brokers, who would sell share without informing clients – and clients would only find out when they got a CDS statement showing less shares than what the broker said they had. Later the frauds went even further when brokers would ensure that even CDS statements didn’t get up-to-date records of share sales.
  
  I had to change broker for a company account this week and the reality was much more than. I had a team of people, the transfer was between two viable brokers and we were able to get all the (numerous) documents that were asked for. Yet it still involved almost a dozen trips to the office and took almost two weeks.
  
  The steps taken included
  (i)Open an new CDS account with new broker
  (ii)Close old CDS account with old broker
  (iii)Move shares from old to new CDS account
  
  Documents that were asked for included
  - 3 copies of Certificate of incorporation with – one stamped by old broker, one stamped by new broker, one for the CMA (all stamped by company seal)
  - Memorandum & articles of association requested by new broker (was not required at old broker so copies had to be traced and photocopied)
  - 3 copies of director ID or passports – stamped by old broker, stamped by new broker, one for to the CMA (all stamped by company seal)
  -2 copies of form of shares being transferred one called CDS 4A and one called CDS 4B, signed by directors and stamped with company seal. One form must be stamped by old broker, one stamped by new broker
  - 200 shillings ($2.50) transfer fee
  
  Now imagine what it is like trying to reconcile accounts, reclaim investments or move from a collapsed stockbroker? Or a fraudulent one? Or one who doesn’t have motivated (paid) staff, or proper records?
  
  Also until last year, IPO’ were considered sure winners – and people would open several accounts e.g. in the name of their mother, grandmother, cousin, maid, driver etc, all in a bid to get more shares after the fractional allocation that characterized Kengen and Safaricom IPO's, but before the price rocketed up on day one. Many CDS accounts were opened, many by new temporarily hired staff in a bid to get as many applicants in as possible during the limited (IPO’s usually 2 -3 weeks) and some rules were readily relaxed. I explained these to the new broker, but they said CMA can come and audit their files and they have to comply CMA have their hands full with collapsing or non-compliant stocbrokers!
  
  So, finally, the new account is now open, after a very tiring two weeks, during which I confessed that it was maybe better to sell all the shares held at old stockbroker and open a new account at new stockbroker than to attempt to transfer the shares.
• March 17, 2009
• 5:37

  Kutwa Tuesday: Toxic Brokers

   » ‎ bankelele

  Tags:  TED2009  

  Toxic Brokers The US has toxic banks, Kenya has toxic stockbrokers
  
  Discount stockbrokers was yesterday placed under statutory management. It has been technically insolvent since new managers were appointed six months ago, and given the cost and extent of their operations it’s unlikely to ever turn round.
  
  Bob Mathews was also re-admitted at a stockbroker after injecting in new capital, but once labeled at a toxic broker no amount of rescue cash is enough to salvage an institution. Nyaga stockbrokers got a lifeline infusion of Kshs. 100 million rescue loan, which was largely paid to other brokers, but it was not enough and the firm went under too. smart investors should read the signs of a collapsing company
  
  Capital Gains market turnaround
  
  The Nairobi stock exchange had its best week in a long time, with a mini run led by Equity Bank up 31%, CMC up 25%, Kengen 22%, EA Cables 20%, National Bank 16%, EA Breweries 15% and Diamond Trust 12%. With no significant financial results, or economic & political news out last week, the rise remains a mystery; Was it in reaction to US markets having their best week, or realization that there was a new finance minister in charge or investors realizing that they had missed on the infrastructure bond (and the next one was not as lucrative), or was it stockbrokers making a last stand?
  
  Insurance Losses
  
  Pan Africa Life a relatively large company with assets of Kshs. 6 billion ($75 million) returned a pre-tax loss for 2008 of Kshs. 175 million down from a profit of 51 million in 2007, which they attribute to the unrealized loses in capital markets. If a large insurance company is in this state, what about the smaller other Kenyan insurance companies? Already standard assurance has gone under and it was not the main company in public transport sector (matatu’s) whos' claims are being blamed for its collapse.
  
  Opportunities & Events
  
  TED Global applications have opened for the 2009 TED Global 2009 conference. Deadline is April 3 for fellowship applications
  
  Tujuane Mixer will be held on March 20. More details at Tujuane site and here’s a re-cap of the last mixer I attended. The event will be facilitated by Nyokabi Njuguna, Founder - Entrepreneurship and Leadership Foundation, and with a special appearance by R&B vocalist and Guitarist Harry Kimani.
  
  Nairobi Wine Festival Get stylish and drunk is how Rafiki Kenya describes the event on Friday and Saturday (20/21 March)
• 0:39

  Zain in Kenya

   » ‎ bankelele

  Tags:  Zain  

  Vuka Verdict:
  
  
  Zain introduced the Vuka revolutionary flat rate call package of 8 shilling per ($0.10) minute to call all other networks in October 2008. After an initial surge in customers. What do the numbers bear out?
  
  Rough dialing
  
  - Zain gained a million customers 3.08 million (up from 2.1 million)
  - Zain lost revenue $162 million (~13 billion) down from $194 million
  - Zain lost big money: Net loss was $90 million in 2008 compared to a loss of $21 million in 2006. the ~Kshs. 7.2 billion is perhaps the largest corporate loss in Kenya for a single year
  
  Zain outlook
  
  - The 2009 numbers should be much better as marketing costs of Zain’s Vuka were quite heavy for the last quarter of 2008 and by which time customer numbers were still growing. But with just 5% of the entire Zain group customers, Kenya may be an expensive group to manage in what they consider to be a competitive market with low revenues [Average revenue per user/ARPU was $6 (down from $7)]. Zain claims 18% market share to Safaricom’s 77% and 5% for Orange
  - Zain owned 80% of the Kenyan operation, up from 70% in 2007
  - If Zain can state the population of Kenya is 38.5 million (up from 37.5 in 2007), is there need for an expensive Government census which will take place later this year?
• March 10, 2009
• 8:46

  Kutwa Tuesday: From Stanchart to LPG

   » ‎ bankelele

  Tags:  Nairobi cost of living  

  stories found this week
  
  Stanchart Bank:
  
  Smaller profit - Standard Chartered is being much maligned for being the first bank to report a profit drop in 2008 of 4% to 4.7 billion shillings. ($59 million) (Increased 29% in 07). The bank which adopted a conservative approach compared to Barclays, KCB and Equity. Stanchart had asset growth of 9% to 99 billion (13% in 07), deposits up 4% to 77 billion and loans up 10% to 43 billion in 2008. Still their shareholders will get the highest dividend of any listed bank in 2008.
  
  Here are some other performance comparisons of the main banks that have so far reported their 2008 results.
  
  Goes for smaller customers - In a slight about turn, Stanchart has also launched a new low cost transactional account called Hifadhi, costs 2,000 to open, no ledger fees, or ‘cash handling fees’ with e-statements you only pay for transactions you incur, though its’ not as affordable as other 'cheap' bank accounts for small earners. Going for smaller customer has been a recurrent theme in 2008 with banks, insurance and investment companies lowering the minimum subscription amount. Examples are pepea from Barclays, Toboa from Old Mutual and even the Government of Kenya which lowered the minimum investment for GoK treasury bonds to just Kshs. 50,000 (~$625)
  
  Bank briefs
  - Stanchart get back to what they are good at – big corporate deals this one for Kengen
  - Gulf African launches a shariah compliant mortgage scheme
  - New bank branches: First Community bank now in Malindi, Ecobank in Kisii, while Family Bank re-opened in Githurai
  - Another SMS sends Equity customers into bank panic withdrawals this time in Machakos.
  
  From the blogs
  
  Siasa mbaya, maisha mbaya: Global economic slump aside, Nairobi’s Stock Exchange will not see a bull run until the country’s political problems are sorted out according to MainaT
  
  The Sunday Nation broke a story of the old Embakasi airport been handed over to an unlicensed new airline, but airport analysis comes from one Coldtusker
  
  Following in the success of the infrastructure bond (over-subscribed by 45%), the Kenya Government is offering another bond to supplement its budget deficit; this one is for 8.5 billion ($106 million). More details from Conceptadvisoryservices and the minimum investment is just 50,000 ($625).
  
  Kenya Rugby Effects: Kenya had a wonderful run at the IRB World Cup in Dubai, and knocked out defending champions Fiji in the quarter finals. Here’s some rugby loss reactionfrom Fiji.
  
  Elsewhere
  
  Employees lose & lose - it’s been a bad week for employees as the Employment Act was set aside and the government shifted more of the pension burden to civil servants to contribute towards their own retirement funds.
  
  Madaraka finalized - Madaraka Estate houses were finally sold, apparently ending a long long running saga between homeowners, the City Council and the National Housing Corporation who should really update their website.
  
  Laptop mania - so many offers for laptops these days, new this week were
  - Safaricom selling Macbook with broadband modem for 100,000 ($1,250)
  - Acer A110 laptop on sale with open office for $230 - great for Kenyans new to mini laptop market
  - Even my bank/broker (CFC) hawks Acer Aspire 4710 and has loans that work out to 5,500 ($70) per month
  
  Is Grad School a Con? - Half the Sunday Nation advertisements were for colleges aiming at the recent high school graduates whose results were announced last week. Also growing are the numbers of universities and master programs, but this article argues against going to grad school to avoid the recession with the author pointing out that;
  
  - Grad school pointlessly delays adulthood.
  - PhD programs are pyramid schemes
  - Business school is not going to help 90% of the people who go.
  - Most jobs are better than they seem: You can learn from any job.
  - Graduate school forces you to overinvest: It’s too high risk.
  (found at chris blattman)
  
  LPG Shocker - when to buy cooking gas last night. Found the cylinder, however it appears that there is now a valve that will be mandatory on all cylinders from April 2009 - it is a universal valve, that will enable consumers to buy LPG /cooking gas from any supplier e.g. Kenol., Total, NOCK - replacing cylinders from any of them, since they will now have a common head/valve. The move is supposed to break the monopoly of established companies e.g. if you had a Kenol gas cylinder, you could only replace it at Kenol when buying new gas, whereas if you wanted to switch to Shell gas, you’d have to buy a brand new cylinder.
  
  
  new gas cap
  
  The problem was that many Total stations did not have the valve. (I checked at three stations) and they all sent me to the place that has everything in Kenya - Nakumatt. Nakumatt also say they stock valves for all companies, but only had the generic caps to sell. It’s scary to use a generic caps, since there are many fires in Kenya caused by exploding/leaking cooking gas cylinders. Hope this turns out ok when April comes around and more consumers realize they have to buy caps which cost anywhere from 500 ($6.25) to 900 shillings each, another cost to the burdened urban consumer. It would also be nice if oil companies and/or the Government conducted some consumer awareness about this matter, not leaving it to Nakumatt and untrained Petrol attendants.
• March 06, 2009
• 9:24

  Kenya Bank Charges

   » ‎ bankelele

  Tags:  bank charges  

  Late in February 2009, the Central Bank of Kenya released their bank charges survey (PDF). The earlier comments after the last survey still apply mainly:
  
  1 It’s a good read
  2 Customer satisfaction/service should be measured (it’s not just about costs)
  3 Savings accounts do attract charges (any pay very little interest)
  
  Banking will probably get cheaper as banks adapt to competition from mobile companies –i.e. Safaricom M-Pesa and Zap from Zain which are becoming become mini e-wallets.
  
  Also found was a recent article on avoidable bank charges - which were:
  
  1 overdraft fees
  2 ATM fees (that means avoid pesa point and Visa charges)
  3 Minimum balance fees
• 9:02

  E-Government Moment

   » ‎ bankelele

  Tags:  Media bill  

  E-demand Kenya High school exams results were announced this week, and the top keyword searches at the site for one day were as follows showing the demand for information online
  
  1. 12.79% www.examscouncil.or.ke
  2 6.73% bankelele
  3 4.38% kcse results 2008
  4 2.69% related:www.examscouncil.or.ke/searchkcseresults2007.php
  5 2.36% Kenya examination council
  6 1.68% examscouncil.or.ke
  1.68% 2008 kcse results
  1.68% http://www.examscouncil.or.ke
  1.01% Kenya examinations council
  1.01% examscouncil Kenya
  1.01% www.examscouncil
  1.01% www.examcouncil.or.ke
  1.01% kcse examination results 2008
  1.01% related:www.examscouncil.or.ke/
  1.01% Kenya national examination council kcse results
  
  E-possibilities: Also at the Kenya revenue authority site is this land rent checker which should enable potential buyers to investigate land claims before they buy
  
  E-legislation the media kenya communications 2008 bill which contained several laws regulating and facilitating e-commerce is back in the news with media owners asking for certain sections to be amended. Read How was the bill passed over their protest
  
  E-infrastructure The first of three undersea fibre cables has reached Kenya’s shores. Much is expected with promises that communications costs could be lowered by up to 90%. And other transformations through new possibilities for e-government, bandwidth, service providers, broadvand, film & video, content etc. We will see how this plays out, as all these plans and talks will now be put up to the harsh light of reality.
  
  
  
  Also - Found at @dkobia - an E-government website I hope will come to Africa one day.
• March 03, 2009
• 9:30

  Urban Inflation Index: March 2009

   » ‎ bankelele

  Tags:  Nairobi cost of living  

  Changes in the three months ago since my last review in December 2008 and also compared to February 2008, which was just over a year ago.
  
  In 2009, oil prices and maize prices have become the national talk as scandals, shortages, and price hikes have plague these industries causing grave concern that the country could be destabilized.
  
  With maize, a shortage of maize flour on supermarkets coupled with shady deals were highlighted in the media all leading to a motion of no confidence in Parliament against the Agriculture Minister in February 2009. it was shot down
  
  In oil/petrol, the collapse of Triton petrol, a small politically-connected oil marketer had ripples across the industry. The firm appears to have made a big gamble and purchased and stored excessive stocks in the expectation that oil prices would remain high, but when they dropped, the firm imploded and the chief executive fled to India. It has become a monster scandal with staff losing their jobs, banks suing the government (through the oil storage and pipeline companies) and calls for another no confidence vote in Parliament, this time against the Energy Minister.
  
  changes in the last three months
  
  Gotten cheaper
  
  Fuel: A Litre of petrol fuel (at local petrol station) is now Kshs. 75 (~$4.2 per gallon) which is about 20% cheaper than it was 92.7 in December 2008. Shell Petroleum led the price drop, forcing other oil marketers to follow suit and probably did in Triton with their price cut in December 2008. Petrol was Kshs. 88 a year ago
  
  Unchanged
  
  Staple Food: Maize flour which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs. 96, compared to Kshs. 97 in December 2008. However it cost just Kshs. 52 a year ago
  
  Communications: Despite the presence of two additional phone companies, the mobile price war has cooled and calls cost about Kshs. 8 (~$0.10) per minute. With Zain, the price applies across all networks, but for Safaricom it's within their network only. New companies are offering gimmicks like Yu's Kshs. 0.50 per minute (after making calls for two minuets at Kshs.7.50). However other prices, notably in data and equipment (handset prices) have dropped. Safaricom modem’s cost less than ½ their introduction price, and features like Picture messaging (SMS) now costs Kshs 3.50 ($0.04) (it was introduced at 20) a year ago Safaricom calls were also about 8 shillings per minute
  
  More Expensive
  
  Electricity: my bill last month is Kshs 1,800 - slightly less than the bill a year ago. However by looking at the components that make up the bill - fixed charge is Kshs. 240 (was 175 a year ago), fuel cost adjustment is 427c per kwh (was 199c a year ago), forex adjustment was 63c per kwh (was 31c per kwh) - all causing my bill to cost about 70% higher than my approximate consumption a year ago. This is also a sore point with Kenyan manufacturers and industries who have complained (PDF) about the high tariffs even as Kenya power & lighting company announced improved profits for 2008.
  
  Foreign Exchange: 1 US$ equals Kshs. 80.07, it was 79.08 in December 2008. Remittances to Kenya which have dropped every month since October 2008, are partly to blame. US$1 was 70.7 shillings a year ago
  
  Entertainment: A bottle of Tusker beer (at local pub) is Kshs. 130 ($1.60) up from Kshs. 120 in December 2008. East African Breweries, Kenya's leading brewer, has complained about high input costs and new taxation, and for once their share price is almost as cheap as the recommended retail price of their main seller - a bottle of Tusker beer was 120 a year ago
  
  Other food item: Sugar (2 kg. Mumias pack) is at 165, it was Kshs. 160 last December. 150 a year ago
  
  EDIT: Also, more expensive is Housing - the rent was hiked 40% in January 2009; however that’s still about ½ what I’d be comfortable paying for a mortgage in the neighborhood.
• March 02, 2009
• 7:36

  KCB Dodges Triton Bullet?

   » ‎ bankelele

  Tags:  KCB  

  Kenya Commercial Bank released their 2008 financial results over the weekend.
  
  No. 1 but… KCB is now Kenya’s largest bank by bank assets and group assets, though Barclays still has a much larger book of loans and deposits, as well as higher profits.
  
  Also with less than half the assets, Equity may be more profitable than KCB by 2010 if its exponential growth continues.
  
  KCB assets were up 56% and profits 40%, with deposits up 28% and loans up 40% compared to 2007. 2008 was a balanced year for the bank actually performed quite well in Q4.
  
  IPO Killer KCB has effectively delivered the final nail in the coffin of the Kenya Pipeline IPO by suing the corporation for almost $14 million of missing oil. The bank is also leading the case against Triton.
  
  KCB beats expectations A January 2009 analysis by African Alliance pegged a Kshs. 2 billion hit to KCB profit and a pre-tax profit for the bank of Kshs. 2.2 billion - yet KCB managed to report a pre-tax profit of Kshs. 5.3 billion. AA also had an overweight recommendation with a price target of Kshs. 28.85 (at the time KCB was 21) and it looks very attractive at Kshs. 15.5 today.
  
  Q4 watch In the September to December 2008 period deposits were up by 9% and loans by 4% - compared to Q1 loans which were up 4% and deposits 17%. KCB also built up quite a huge cash position with 39 billion (~$500 million) in bank placements at the end of the year.
  
  2009 watch This year the bank has announced, a surprising decision to extend real estate finance to estate developers t the tune of Kshs 250 million (~$3.1 million each) and is also one of the few banks to continue offering personal loans in a very public way with media advertisements
  
  More Nairobist analysis on KCB and KCB and Triton
• February 25, 2009
• 4:24

  Nairobi Stock Exchange Fiddles

   » ‎ bankelele

  Tags:  Nairobi Stock Exchange  

  While investors burn or run
  
  Fresh off the appointment of a new chairman of the Capital Markets Authority, the owners of the Nairobi Stock Exchange welcomed him with another pledge to:
  
  -Cap broker ownership of the stock exchange (NSE) at 40%
  - Reinforce compliance and supervision through implementation of a risk based supervisory approach yada yada yada.....
  - Deal with the findings of the PWC Forensic Report on Nyaga Stockbrokers once the report is received from the CMA i.e. they officially haven’t seen it!
  
  So they throw the ball back to the Government (to fast track the demutualization process - and what this entails) and the CMA (new Chairman to act on the report) while investors rush back and forth like headless chicken changing brokers in search of the one honest broker left in Nairobi, while also yearning to return to the good old days when share certificates were kept in bank vaults or under mattresses.
• February 23, 2009
• 2:05

  Crunch time for supermarket

   » ‎ bankelele

  Tags:  Uchumi  

  Over the weekend, the Receiver/Manager team of Uchumi Supermarkets (under receivership) published their six month accounts for the ½ year to December 2008
  
  - P&L: Sales Kshs. 4.43 billion ($55 million - up 30%), gross profit 845 million (up 20%), operating expenses 676m (up 24%), financial 99m (unchanged), pre tax profit 69 million (up 10% from 63m in December 07)
  - Balance sheet: fixed asset 706 million (down 7%), current assets 1,123 million (up 20%), current liabilities 1,742 million (up 57%), net current assets (-619 million), total assets 87 million (down 85% from 589m in December 07).
  Liabilities: capital 900 million, reserves -1,835 million, loans 1,021 million (down 36%), total liabilities 86 million
  
  The attached notes state that cash & equivalents were 130 million, debenture holders were paid 23m, and principal banks have received 346m to date (including 16m in the last 6 months).
  
  However, despite increased sales, basket size, customer numbers and product ranges, the statement notes the urgent need to address the technical solvency challenges in the balance sheet through
  - restructuring of some secured obligations (bank loans)
  - increased equity from shareholders,
  - or failure to that, (imminent) invitation to third parties (search for strategic investor is ongoing ).
  
  The ultimate objective of Uchumi receivership plan (URP) is re-listing at the Nairobi Stock Exchange (NSE)
• 1:47

  Property Expo

   » ‎ bankelele

  Tags:  KPLC  

  The Property & Home Living Expo 2009 was held at Sarit Center this weekend. It was rather subdued (fewer banks and exhibitors) compared to the last homes expo held in October 2008. The only banks in attendance were perennial mortgage lenders Housing Finance and (KCB) - Savings & Loan
  
  Most of the exhibitors were property agents including:
  - Knight Frank Vipingo Ridge golf villa for Kshs. 19 million, rents at Riverside Park and the (under-construction) Sameer business park
  - Villa Care
  - Regent (also the Hacienda eco-city Africa’s first eco-city, 2,3,4 flats & bungalows in Mwakirunge – north coast and (under construction) Green House a huge shop /office complex next to Adams Arcade)
  - Others were Sedco and Vidmerck
  
  Other exhibitors included a Dubai property company, the Kenya Power & Lighting Company (KPLC) who now have a stima loan for new customers to get loans through Equity Bank to pay for electricity installation/connection charges, Climacento green tech (info@climacento.co.ke) who advertise 50% savings on electricity bill through their solar water heater and Mekan Mattress experts (found at Nakumatt)
  
  
  
  
  
  
  
  
  
  
• February 20, 2009
• 0:38

  Barclays and the NIC-ex

   » ‎ bankelele

  Tags:  NIC  

  A few days after Equity led with their 2008 results next comes Barclays Bank Kenya and NIC Bank.
  
  Barclays Kenya have shrugged off a difficult year to report a slight growth in profits while also admitting a slowdown in lending and shift in plans to consolidate after an expansion period that saw the bank go on an expansion splurge in the last two years. Barclays Kenya 2008 profits (PDF)
  - Growth of in assets of 3% every quarter of 2008, except Q4 which had a reduction of 2% to end the year. Overall asset growth in 2008 was 7%, while in 2007 it had been was 34%. Assets at December 31 were Kshs. 168.8 billion ($2.1 billion) compared to 172.3 billion at September 2008
  - Deposits grew by 12%, 5%, 3% in first three quarters, followed by a decline 5% in Q4 – and overall up 16% for the year - same as in 2007
  - Loans were up 3% from 2007
  - Income up 25% compared to 24% in 2007
  - Expenses up 33% compare to 37% in 2006
  - NPA up 22%
  - Despite modest growth, edged past Equity as most the capitalized bank
  
  NIC was spun off from Barclays as an asset finance specialist, a business it still dominates while competing against Barclays itself now. The Bank is still in expansion mode with a rebranding under the 1 bank banner as a one stop shop for all their customers business needs. NIC Bank 2008 profits (PDF)
  
  - In 2008, growth in assets was 36%, including 18% in Q1 (while the country was fighting?) and 8% in q4
  - Deposits were 42% up from a year ago, again with 17% in Q1 and 10% in Q4
  - Loans were up 35% in 2008, with 9% in Q2 and 14% increase in Q3, followed by just 2% in Q4 the lowest (went big on Q3 and decided to slow down in Q4?). NPA's still just 4% of loans
  - Despite re-branding, income was up 33% with expenses up 25% in 2008
  - Profit was up 41% in 2008, compared to 55% in 2007.
  
  KCB overtook the overtook Barclays as the number one bank, a position it should hold, despite the hit it will take from the link with Triton Oil , the collapsed, scandal ridden oil company. Results should be out in a few days.
  
  Conflicting signals - crunch or not?
  
  KCB’s housing subsidiary Savings & Loan (S&L) extended financing to real estate developers this week, increasing lending limits to Kshs. 250 million ($3.12 million) and willingness to finance of 85% of the construction costs of property developments. Some already wonder if they are contributing to a real estate bubble in Kenya.
  
  Meanwhile there was an offline story in the Standard this week where the MD of listed paint maker, Crown Berger, lamented that banks are behaving strangely, reluctant to lend money, and he was now looking to launch a bond to raise working capital funds for the firm.
• February 16, 2009
• 10:11

  Kenya Infrastructure Bond

   » ‎ bankelele

  Tags:  NSE stockbrokers  

  The government of Kenya infrastrucre bond closes on Wednesday and looks to be a successful fully subscribed offer that will raise Kshs. 18.5 billion (~$231 million).
  
  It will have proved irresistible to funds and institutional investors who have been looking for investment outlets as the Nairobi Stock Exchange slump persists, and the sure 12.5% annual return from the Government of Kenya over the next 12 years is a sure bet. The 12.5% interest payments will be paid semi annually with principal repaid in 2015, 2017 and 2021. Bonds from Mabati and Barclays were fully subscribed in 2008
  
  Through the minimum investment is just Kshs. 100,000 (~$1,250) it looks like there’s little interest from retail investors, with many smarting from the free falling NSE and more concerned with protecting their existing investments (read these great tips) from rogue stockbrokers to sign up for bond which, the fire-fighting Capital Markets Authority (CMA) has not gotten round to providing much investor education. The short window (about 3 weeks from Jan 28 to Feb. 18) may also not have favored retail investors.
  
  The success of the bond which is earmarked for road, geothermal and water projects comes despite some reservations (little infrastructure spending identified, limited oversight, may affect Kenya’s credit rating). The bond was first set out in the 2008 budget by the Minister of Finance.
  
  Read more bond perspectives from the Kenya Capital Investment Group blog
  
  Opportunities
  
  Start your own collection agency from Collection Africa
  
  - Join embattled Suntra investment bank as a manager - investment banking & fund management or manager - stock broking
• February 13, 2009
• 1:10

  Equity leads the Kenyan Economy

   » ‎ bankelele

  Tags:  NSE investments  

  The first Bank (as usual) out with the 2008 profits is Equity Bank with the usual staggering financial results (PDF) for 2008 with 101% growth in profits and 103% in loans.
  
  But a closer look at the numbers show some more subdued stats that may indicate an economic slowdown, and which may be confirmed when other banks (especially Barclays and KCB) release their year-end results in the next two months.
  
  - Equity’s growth in assets is 45% from a year ago, but 6% in Q3 and 3% in Q4
  - Equity’s deposits are 55% up from a year ago, but this breaks down to 23% in Q2, 10% in Q3 and 6% in Q4
  - Equity’s’ loans are up 87%, but the 41% increase in Q2, was followed by 17% in Q3 and 2% in Q4
  - Expansion costs - income up 98% from a year ago, but expenses have kept track – up 97% from a year ago (in 2007, the spread was 73% and 52% in 06/07)
  - Factor in Safaricom IPO lending (interest and fees) estimated at– and Q2 income was 3x higher than in any of the other two quarters
  - Cross-checking against the 2007 election and disruption in economic activity, in 4Q of 2007, Equity had growth of 18% in deposits and 33% in loans with 54% in profits in same quarter, with in 1Q of 2008, had 8% deposit and 11% in loans, rates which outpace 4Q of 2008
  
  Shareholders will be happy with the Kshs. 3/= dividend, but the 1 for 10 share split, will add a huge float of shares to an overflowing NSE pool.
  
  Bank opportunities
  most from the daily papers this week
  - African Development Bank is currently accepting applications for its Young Professionals Program . Apply online by 20/2
  - Barclays seeking debt recovery agents – auctioneers, re-possessors, valuers and investigators. D/L is 28/2
  - Commercial Bank of Africa: senior manager finance. Apply through KPMG by 25/2
  - Family Bank Bancassurance Manager. D/L for online applicatiosn is 6/3
  - IFC Investment officer (private equity & investment funds division) Africa, based in Nairobi. D/L is 27/2
• February 10, 2009
• 3:07

  Share Portfolio February 2009

   » ‎ bankelele

  Tags:  NSE portfolio  

  
  Quarterly portfolio review after last snapshot in November 2008
  
  
  
  The Stable
  Diamond Trust ↓
  KCB ↓
  Safaricom ↓
  Scangroup ↓
  Stanbic (Uganda) ↓
  
  Changes
  - Best performer: Diamond Trust -8%
  - Worst performer Stanbic – 33%, Safaricom -23%
  - In: none
  - Out: none, but sold a little KCB in January
  
  Events & Outlook
  - Performance: Portfolio is down 20% in the last three months while the NSE Index is down 25%
  - Did not buy KQ and Kengen as expected, but that should happen in the next few weeks as prices continue to drop
  - Sat out the Co-OP IPO and made just one trade in three months (sold some KCB in January). Are brokers generating enough income to stay afloat? I hope they don’t try and introduce new charges levied on dormant investor accounts
  - Money markets: Got started in money markets by signing up with a CBA Unit Trust
  - Bond markets: The Government of Kenya has lowered the minimum investment for GoK treasury bonds to just Kshs. 50,000 (~600)
  - Investor awareness: The CDSC started sending out monthly statements by e-mail to investors, cutting out the postal service, and alerting investors each time shares are bought/sold using their account.
• February 07, 2009
• 2:22

  Missing the TED Party

   » ‎ bankelele

  Tags:  TED2009  

  The ongoing TED Conference in California makes me thing back to the remember TED Global that was held in Arusha, Tanzania in 2007. From the opening talk by Euvin Naidoo President to the last talk President Jakaya Kiwkete this TED conference was a unique event; it was a magical event full of euphoric, optimistic and inspiring moments. Links, networks and friendship were formed and the path was set out to open a new chapter for Africa, through business & investment, with diseases & poverty largely eradicated. Sadly in 2009 not much has change in the continent and even some of the shining economic models then like Kenya, Nigeria, South Africa, have had politics overshadow and handicap their economic ambitions.
  
  Housekeeping
  
  New tools
  - Heard about Twitter in Arusha, but only signed up last month. It’s a bigger world than blogging, and fills in a lot of the gaps e.g. found something unique, but too small to post, or you just want to share in a second via mobile phone? Twitter’s the answer!
  - Never has much interest in photography as a blog tool, but got a camera now, so fellow shutterbugs - Hash, Mental, Afromusing, Mweshi - your influence has rubbed off, and I’ll be throwing in random photos of travel and daily work events here are a few
  
  
  forest near Kericho
  
  
  I found the Ark
  
  
  would you steal these hotel sandals?
  
  Getting some love
  - Bankelele is listed as one of the 100 best blogs to learn about Africa - not sure how selection was made, but there are some interesting reads on that list 87 Bankelele. Banking and business are at the forefront of this blog written by a Nairobi banker.
  - The best way to learn about blogs in other parts of Africa or the non western (US, Europe) world is through Global Voices. They have a post that mentions the top ranked blogs in Africa with Bankelele (ranks 18) from Kenya who writes about baking banking, finance and investment in Kenya and Bongo Celebrity (ranks 20)
  - The Business Daily ( a Kenyan financial newspaper) had a feature on blogging with topics like Blog post revolution hits corporate Kenya, Blogs command attention of corporate world, Blogs emerge as avenues for making money, Companies use online platform to monitor views from the public, Fibre optic cable to pave way for corporate blogging, Mounting lawsuits could sound death knell for social sites and What is likely to compete with the mainstream media which noted Some are born out of events like bankelele.com Bankelele, started in 2004 after the blogger attended a “very riotous AGM.” And he describes his blog as “ It’s my diary of financial events —and as a banker and investor. I use it to keep track of pertinent events.
  
  Anyway, I hope to link up with some friends from TED and collaborate on projects in the future and that the Business Daily leads to more corporate blogging opportunities and ideas in this part of Africa.
• February 05, 2009
• 23:10

  Profit Warning Friday

   » ‎ bankelele

  Tags:  NSE stockbrokers  

  
  
  KQ Profit warning for Who?
  Kenya Airways issued a profit warning a few days after media reports had painted a rather rosy picture of operations at the airline with increased capacity and utilization. (That’s what happens when you release operating results without any shillings or dollar attached.
  
  The fuel price , PEV, and reduced tourism has been well known within the investment community and this did not appear to impact the price until the actual ad and media corrections were carried in the newspaper , perhaps spooking retail investors and the stock is down 22% this week. The operational figures already show that the airline is in turnaround mode and is being hammered when it has already hit the bottom. I need to attend more investor briefings. Nether announcement appeared at the Nairobi Stock Exchange (NSE) website where company quarterly announcements usually run
  
  Profit warning at the NSE
  On Thursday, the Capital Markets Authority (regulator) release a brief (copy here ) addressing issues perhaps that should have been said by the NSE. It noted that bear markets do happen (NSE declined 50% between 2000 and 2002), stockbrokers are in trouble (reduced activity, means low turnover and low commission), are restructuring (layoffs and branch closure s), and exposed (risks could arise from fraud. Nevertheless, shares are safe and better left to long-term investors!
  
  We are not rogue this came a day after directors of Suntra Investment Bank, made a similarly candid admission of trouble ”business is so low at the moment that we are actually eating into our own funds” - one of the few times a financial institution has admitted being in difficulty, as they tried to contain damager (a single court case), but which left spooked customers flocking to transfer their shares
  
  Executive on profit
  Michael Joseph the CEO of Safaricom, Kenya’s most profitable company, launched an unusual rant against the government and business climate saying the first three things an investor needs in Kenya are (1) a generator (ii) a 4WD car (iii) a security firm – before they can even think about making any investment in Kenya. he said they spend 1.5 million euros on diesel and called the new universal service fund tax stupid as mobile sector is already over-taxed
  - Man who sees no losses on the horizon is the CBK governor, an eternal optimist after launching an infrastructure bond. Kenya plans to raise Kshs. 18.5 billion (~$245 million for roads, electricity generation & distribution) from investors who will pay a minimum investment of Kshs. 100,000 or ~$1,250). 12.5% interest will be paid semi-annually with principal repaid 2015, 2017, 2021. He had earlier commented that global meltdown should not have much impact because Kenya is primarily a rural agro-based economy
  
  What else happening?
  - Kenyan knows Madoff: listed among the hundreds of fabulous fraudster Bernie Madoff’s clients is Sangare Ranch of P O Box 24 Mweiga Kenya Africa
  - Barclays Uganda counters rumors of a collapse/closure
  - Global credit rating of South Africa, previous rate triton high credit ratings of Kenyan companies with collapsed oil firm Triton downgraded to DD, Sasini’s ratings maintained at BBB+ (triple B plus) and A2 (single A two) for the long and short term respectively, and Eveready East Africa Limited downgraded to BBB+ (triple B plus) and A2 (single A two) for the long and short term respectively. Moody have downgraded Toyota today, so who’s safe?
  - Fuel shortage was experienced in Nairobi – back and forth between Kenya pipeline company, ministry of energy, oil companies who all absolved themselves for any responsibility; Read more at Coldtusker
  - Who’s the Total Man at the NSE?
  - Mumias profit down 73% to 231 million at the half year half year on sales of 6.2 billion (down 8%)
• 3:45

  Insuring the masses

   » ‎ bankelele

  Tags:  NSE stockbrokers  

  In a quiet month for banks Equity Bank is making some quiet strategic moves for the long term, that may shake up the insurance sector in Kenya.
  
  They have started selling insurance cover to their customers through their wholly owned subsidiary Equity Insurance Agency. Like with the health care package they started selling last year, it is quietly marketed to customers within the banking halls only – no public adverts so far and little mention elsewhere. Customers can sign up for motor vehicle insurance, domestic over, personal accident & travel, medical, and fire & burglary for businesses.
  
  Equity continues a trend of rolling out products that are useful but have low penetration in Kenya like medical insurance and mortgages (they own a ¼ of Housing Finance)
  
  Also they were earlier reported to have acquired an investment banking license from Juanco Investments - a little known company who's also one of their shareholder.
• February 02, 2009
• 0:00

  Sporting Moment: GTV Out

   » ‎ bankelele

  Tags:  GTV  

  GTV folds
  It has been a bleak weekend for Kenyan sports – Gor Mahia lost 0 - 5 to a visiting team from Rwanda, Zimbabwe has now defeated Kenya four matches in a row in Cricket at Mombasa & Nairobi, but most shocking was the sudden shutdown/collapse of GTV – who for the last two years were the main broadcasters of the English soccer premier league in several African countries.
  
  
  
  Their statement attributes the collapse to the ongoing global credit crunch, but their demise seems similar to that of Kirch Media who spent big in the late 90’s to acquire the rights to broadcast two World Cup events and also 100 years of formula one races among other media properties - but who folded shop a few years later in one of Germany’s biggest corporate collapses.
  
  What next? I expect Multi-choice DSTV to step in and pay the liquidators of GTV about 30% and take over their broadcast rights in Africa (and perhaps hike their prices too), while in Kenya, a successful bid for GTV’s soccer rights could also be an opportunity for Wananchi's Zuku to make a nationwide impact.
  
  Business impact in sports
  The local impact of the economic crisis is likely to be replicated in sports.
  
  - The local soccer league did well last year (2008) with private interests participating and sponsoring the teams & competitions – there was huge fan interest, media interest (for once local radio stations actively previewed, reviewed and encouraged attendance of local soccer matches) and a private security firm (G4S) was in charge of the ticketing and match revenue collection.
  
  But will the economic crisis affect things? Will sugar teams like Sony and Chemelil continue to support sports when even the only profitable company in the sector (Mumias) has profits down 80% this year? And what about Sher (Flower) and other small company-sponsored teams?
  
  - The local motoring scene was mainly supported by KCB last year and fortunately, despite the banks ongoing problems - particularly with a fellow sponsor (Triton), they have agreed to also sponsor the 2009 rally season. However the loss of Paris Dakar to South America shows the global nature of sports and that events (like teh Safari Rally) can be translocated elsewhere if countries don’t pay attention to details of sports management. in 2009, pressure shifts to South Africa to progressively move nearer the completion of stadiums for the 2010 world cup.
  
  - Rugby continues to be well organized, attract top notch sponsors, and the annual Safari Sevens is the premier sports event(party) - with Kenya's Sevens Team off to participate in the IRB Sevens World Series next weekend.
  
  Bad management
  Another problem in Kenya is bad management - and while every sport has behind the scenes ramblings and wrangles, Kenya is no exception with motor sports, cricket and soccer feuds that have long been a distraction for the sports.
  
  Also all sports go through generational changes - and in the off season, Athletics Kenya management went through elections that were well contested. However in Kenya we need to have longetivity of athletes, not management officials; it is rare to have someone (except for Catherine Ndereba) participate successfully at more than one Olympic event. Other countries stars like Haile Gebreselassie, Hicham El Guerrouj and Kenenisa Bekele have successfully represented their countries at consecutive Olympics - while in Kenya it is sad that it is mainly the officials who show such endurance - and that people who were ‘in charge’ of sports like soccer in the 1980’s and 90’s are still in charge today (Sammy Obingo, Sam Nyamweya) – and continue to bicker and blame each other for the problems in the sport.
  
  Having recently read Foul, FIFA comes across as a corrupt institution that does not care about individual countries attempts to improve management of their sports affairs – FIFA wants to dictate who will be the local managers of soccer, and no matter how bad or corrupt they are, they are FIFA’s people who should not be interfered with unless a country wants to be suspended from regional or international soccer competitions.
  
  EDIT: Feb 4 2009 - South Africa based DSTV SuperSport channel reclaimed the rights to broadcast live all English premier league matches, including those from collapsed GTV in 22 African countries over the next two seasons
• January 28, 2009
• 3:16

  Analyzing Kenya Pipeline

   » ‎ bankelele

  Tags:  Corporate governance  

  
  
  Pre-IPO Peek at KPC
  
  Kenya Pipeline Company (KPC) is expected to be the next big privatization project to help plug the current Government of Kenya budget deficit. The IPO transaction adviser selection process is already underway for KPC and other state corporations
  
  How much can one glean from audited accounts of the giant company? I got hold of a 2007 annual reports of the company – a rare big glossy booklet that mentions every project e.g. SAP, ISO, fibre optics, refurbishments in Western Kenya, Mombasa, Athi River, with lots of graph
  
  
  
  KPC still mostly compares itself to other state corporations in terms of goals such as to raise capacity from 440,000 to 880,000 lire per hour by August 2008 - a massive project that later turned controversial and may have cost the last MD (Okungu) his job in January 2009.
  
  Financials
  - 2007 revenue of 8.8 billion shillings (~$117 million) (2007 was 8.45 billion and 2003 was 6.5 billion). 2007 Revenue comes from export services (4.3b) , local services (3.7b), and 748 million from kipevu storage fees
  - Pre-tax profit of Kshs. 4.3 billion in 2007 (~$53 million)
  - Earnings per share was 163 shillings [153 in 2006, 2003 was 29 shillings) – company’s shareholding is made up of 18 million ordinary shares of 20/= par each.
  - Dividend paid out of 8.25 per share each year 2007 and 2006
  - Cash of 4.5 billion (1.1 billion in 2003) of which 2.5 billion is in treasury securities (which they only started investments in 2005)
  - Paid 2.2 billion in direct and indirect taxes and was recognized by Kenya Revenue Authority as a distinguished tax payer
  - Total assets of 20.2 billion shillings (18.7 billion in 2006) –however fuel stocks of 13 billion shillings (384,509 cubic metres) that is owned by marketers is not include in their accounts. [2006 was 36 billion comprising 856,958 cubic metres]
  2008 decline: summarized KPC financial accounts show revenue declined by 7% to Kshs. 8.2 billion and pre tax profit 54% down to Kshs. 2.6 billion in 2008
  
  Auditors: Accounts audited by controller and auditor general, who hired Deloitte & Touche; who said the accounts were ok except to note that that 1.2 billion receivables (current assets) includes 348 million owed from an unnamed oil company that is the subject for a court case and for which no provisions have been made
  
  Scandals: has been a cash cow for politicians for years with a high turnover of managing directors, manager and directors. Different parts of the report mention Kshs. 967 million pending in lawsuits, 404 million leasehold land unable to develop since it is gazetted forest land, 347 million from Oil Company, 314 million of obsolete spares, and Kshs. 221 million for a finance deal with Triple A that cost the previous MD (Ochuodho) his job. The company also provided Kshs. 382 million of services to National Oil Corp of Kenya (related company as they are both owned by the Government– do they pay all oil marketing fees?
  
  Banking
  Bank with NBK, CBA, Stanchart, Co-op. In 2007, they paid off all bank loans (EIB, Stanchart, and CBA) amounting to Kshs. 500 million in 2007, but are still stuck with the 221 million Triple A loan.
  - KPC recently signed a syndicated loan of Kshs 8.2 billion with CFC-Stanbic, Barclays, CBA, Citibank, and KCB.
  
  Exports:
  - Exports 58% to Uganda, 155 Rwanda, DRC 14% Tanzania 6% Sudan 4% Burundi 3%
  - strong shillings bad for export sales
  -pricing structure – more expensive at Eldoret and Kisumu means that the company loses revenue if other countries e.g. Rwanda, Uganda remove their oil at Nakuru or Nairobi depots
  - 50% of their revenue comes from fuel exports, and With oil being found in Uganda, Sudan, and possibly Congo, is the pipeline capable and adequate to transfer oil from central Africa to the coast at Mombasa?
  
  Others & Non core activities
  - will Construct an LPG plant with private sector investors (including Kenya pipeline refineries limited, and now-collapsed Triton) in Mombasa at a cost $50 million and one in Athi River at a cost of $13.5 million by Bharat of India
  - Other income includes Kshs. 8 million in helicopter income, and also disposed of 120 million worth of helicopters in the year 2007
  - 50 million donated to ministry of youth affairs
  - 6 acres worth of land worth 30 million in Nairobi was donated for a street children rehabilitation center
  - Spent 114 million in advertising (by a monopoly) and 35 million shillings in legal expenses
  - Has shares in petroleum institute of east African and consolidated bank
  - Successfully changed their pension from a defined benefit to a defined contribution scheme
  
  Outlook:
  - Slight financial dip in 2008 will probably be attributed to the post election disruptions
  - Capital spending could be significant as they are extending the pipeline to Uganda (Eldoret to Kampala). Also the company already spends quite a bit in pipeline rehabilitation costs, and won't a complete new pipeline (though more expensive) be a better solution?
  - Needs a stronger management team led by a strong MD – like Kengen’s Eddy Njoroge (someone with a legacy to protect who will shun the wheeler dealers) and a stronger board (not just the Energy ministers' cronies)
  - Could be a good IPO buy i.e. a cash cow pre-tax profit margins of almost 50%
  
  Other Opportunities
  - Bank of Africa: branch managers, assistant branch managers, operations assistants’ recruitment@boakenya.com by 5/2
  - Consolidated bank credit manager, administration manager, apply to the Head of HR 51133-00200 by 31/1
  - Housing Finance senior relationship manager (mortgage finance), portfolio manager, legal officer, human.recources@housing.co.ke
  Dyer & Blair sales agents, and for several hundred other weekly jobs visit Kenyan jobs blog
• January 17, 2009
• 5:59

  KCB and Triton

   » ‎ bankelele

  Tags:  CSR  

  KCB has been rather silent on the Triton matter even as the company’s share price took a mini hit and its profitability outlook was downgraded in some circles.
  
  The last release from their website was in reference to the launch of a Sustainability Report of the group. It’s not online yet, though it will be, an interesting report with lots of rarely disclosed facts on the bank, mostly their corporate social responsibility (CSR) activities, and will be repeated every two years.
  
  in the report
  KCB Brand - has a 75% corporate reputation, is the most popular financial brand, and the 4th most popular in Kenya (after Safaricom, Kenya airways and Coca-Cola) according to the Steadman Group.
  
  Silence on Triton can be explained by KCB’s customer privacy guidelines - the bank assures customers of privacy though stringent procedures and guidelines and undertake responsibility for any breach of confidentiality that may arise
  
  Impact of Triton policy on responsible lending requires that the KCB audit committee meets twice a month, credit committee also twice a month to discuss risk profile of bank, and the risk management committee meet quarterly or when required
  
  Corruption & Triton: KCB has zero tolerance to corruption, has 110 ethics champions trained to combat corruption. Also in 2007 KCB exited from transparency international (TI) bribery index, it prohibit political contributions (direct or indirect) from bank funds, and is founder member of Ethical Business Group Kenya?. Report states that 2 staff were dismissed and 9 terminated.
  
  Labour matters
  - employees got an average of 39 hours of training a year
  - Base salary is equal regardless of gender: for subordinates (male is Kshs. 36,057, female is Kshs. 33,984) clerical (m 58,434 f 63,600), section heads (m 85,770, f 87,684) managers (m 192,090, f 161,138)
  - staff include managers (630 males to 287 females), most of whom are aged 30 – 50 years (492 m, 212 f)
  
  Environmental
  – all loan projects are required to obtain environmental (NEMA) certification
  – KCB will strive to reduce water consumption (estimated at 191,000 cubic meters p.a) reduce energy consumption (5.782 million kwh, consume 312,000 litres of diesel which emitted 248,000 and 838 tons of carbon dioxide respectively)
  – KCB will strive to recycle paper, scan documents – encourage customers to uptake e-services (use less paper), participate in tree planting and reforestation,
  
  Empowerment of Kenyans
  - loan base rate of 12%
  - KCB has 71,000 e-customers (receive information by electronic means - which menas less paper consumed)
  - Create wealth nationwide - branches can procure 33% of product in local areas, and KCB has 9 full branches in sparely populate areas
  - provide agricultural loans (mavuno for tea farmers and brookside for dairy operators)
  - in education sector, partner with AIESEC and the palmhouse foundation
  
  Triton ends well? for KCB: The Triton matter may be a forgone conclusion if the Daily Nation article about an out of court settlement between Government of Kenya and its financiers (KCB, Fortis, Ecobank, Equatorial banks) is true - and that the government (i.e. taxpayers) may pay the financiers off to not go to court over their funds lost with Trition and teh Kenya Pipleince Corporation (KPC). The silence will mean that unsavory happenings at KPC will (maybe) not be exposed further, clearing the way (hopefully) for an IPO of the troubled company.