Thursday, May 17, 2007


The 2007 NIC Bank AGM was held on May 16 2007 at the Intercontinental Hotel

Who's the man?
The Chairman, Mr. JPM Ndegwa, was able to handle most questions and diffuse tense moments and awkward (not difficult) questions with careful answers and occasional jokes. He kept reminding shareholders to ask serious, not peripheral questions after the first question was – how can the deputy chairman, be older then the chairman? – answer was deputy is not my successor, he only chairs meeting when I'm away

Shareholder questions
AGM’s are quite routine except for shareholder interaction & questions or if there is special business to discuss, or multiple applicants for director seats such as as Kenya Airways or KCB

- Questions (Q) What are unclaimed? What happens to them? Answer (A) - These are cheques yet to be banked, but which NIC has to hold for about 12 in case shareholders or their dependants show up. However after the budget last year, unclaimed dividends will eventually be transferred to the CMA investor compensation fund.
- Earnings per share growing, but dividend per share still a huge way behind. A – Growth in dividends is prudential, NIC can't pay out 100% of earnings as dividends, and it also has to build up reserves.
- Q; Too many taxes on dividends A - Take it up with the government
- Q; Shareholders without bank accounts have trouble cashing cheques A – Chairman said it’s high time everyone got a bank account, and stop carrying cash around which is dangerous
- Q; shareholder who has bought shares several time gets 3 invitations to AGM and 3 small dividend cheques (and has to pay for each to clear) A - Chairman said he should check that all the shares were immobilized in the same CDS account which should consolidate all the shares
- Q; Why no bonus shares? A - Bonus shares do not increase shareholder wealth, only divide it more times. But it’s popular now, so they may consider it. But for now, if you want more shares, buy more
- Q; Why give t-shirts, don’t want them and want more shares instead A - Chairman answered it was a gift/token of appreciation to those who show up to do the business of the AGM. Added that it was actually a nice pullover, which he would appreciate over the next year (unlike dividend which is only used once)

NPA Q - NPA’s up over the last 5 years, what is the bank doing about them? A - NPA's are actually down over last 5 years. These are actually prudent provisions by NIC rather than lost money which the bank goes after aggressively. In fact since year end (2006) statement were published and 1st quarter (2007) results published last year, this figure has reduced by another 300 million shillings

Growth plans to sustain profit.? A - New NIC capital division will engage in commercial paper and bond activity which does not require lending. Also careful expansion into new branches. Nakuru branch was opened to support extensive asset finance business in the region. Also new branches at Westlands and the Junction (Dagoretti) are already profitable

Costs Q - Staff costs up significantly but staff numbers relatively unchanged A - new mangers hired to lead the bank into new business. This has been successful as NIC has grown 4 fold in last 5 years. Also union demands have meant bank increase staff salaries

CSR: Q - the bank's corporate social responsibility (CSR) projects seem to benefit only whites (mzungus as seen by the picture in the annual report A - that is not correct projects benefit all Kenyans. The bank has focused on the environment and education which benefit all Kenyans
Why not support AIDS war? A – Bank has supported Nyumbani Home and has a staff HIV policy but focus this year is on environment and education

Hot button issue
Q - Management of the Bank not representative of Kenya as they all come from one region and the wealth needs to be spread around the country got some generous applause A – This is a company not a political forum. All managers are hired on merit. The CEO position was widely advertised (nationally & internationally) – they got the best man, and the results speak for themselves. Resources (dividends) will go to the areas of people who buy shares in the company got even greater applause

AGM Goodies: NIC half-sweater, Intercontinental lunch box (one rib, chicken drumstick, soda, spring roll, mini pizza, samosa, apple, cake slice)


Udi said...

Some questions asked at AGM's are ridiculous and a waste of time. Shareholders need to start acting more intelligent. I really give props to board chairmen who have to endure some question. Nice post

KE said...

Only one rib?

bankelele said...

Udi: True, but that's the price of being a public company. Seasoned Chairman (only chairlady is KCB) know how to handle the difficult and the inane questions and keep it going smoothly.

Ke: yes one rib. maybe the intercont chef is a movie fan

AfroFeminista said...

I like that, 'this is not a political forum' :), once again some people just can't differentiate when it's time to do business and when it's time to politik...

I wonder if company execs come up with an annual list of, 'stupidest AGM questions' which they laugh about at the ninth hole (or some such other place...).


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