Friday, December 19, 2008

2008 Kenya Bank Review

What happened in 2008?
See also half year. (who?, what? means no news of note)

ABC: (25) who?, what?
Bank of Africa: (18) Quiet expansion becoming big in asset finance and the bank of choice for French interests, with a new club for small business owners
Barclays: (2) steadying their 2007 rapid growth and expansion in the retail sector, launched two tranches of bonds at affordable prices which made CBK notice and will go into mobile messaging next year
Baroda: (14) Going retail, and opened new branches, no longer playing safe and investing less in GoK securities
CFC Stanbic: (4) merger (takeover) by Stanbic formalized. Collapse of small brokers a boon as they are seen as being safe(r). Will open branches and may need to raise capital next year. Note: If the merger had been planned this year (instead of last) it would have cost ½ as much
Chase (22) one of the fastest growing banks in ’08, ventured into stockbrokerage, but may need to raise capital next year
Citibank Kenya: (8) best return on assets in sector, but with aggressive off balance sheet. Still unclear how much parent troubles will impact subsidiaries in Africa.
City Finance: (43) the country’s smallest bank effected a capital reduction. New owners yet to settle in, but may achieve a slight profit this year
Commercial Bank of Africa: (7) would be a beneficiary of American business interests following Citi bank woes, if it didn’t also own 1/3 of equally troubled AIG Kenya. Also CEO got caught up in Uchumi corruption case and may need capital next year.
Consolidated: (31). Cabinet has approved sale for next year and the deposit protection fund has always planned to exit. 2008 will mark the third year of (modest) profits for the bank, so its eligible for an NSE listing or IPO
Cooperative: (5) went ahead with an IPO and NSE listing late in 2008 in a difficult market to raise capital for expansion
Credit: (35) who?, what?
Development Bank of Kenya: (26) in play next year as GoK (ICDC owns 90%)plans to sell shares in the development finance institution to the public or private investors
Diamond Trust: (11) continued regional expansion with more investments in Uganda and Burundi, and also had a second rights issue to raise capital.
Dubai (42) quiet year, will make a loss
Ecobank: (19) arrived in Kenya big and are setting up retail presence (nairumor that they are the bank Equity emulated to succeed). Came up short in a (huge) pan-African capital raising move, but plan to enter stockbroking next year
Equatorial: (30) activated investment banking wing, but denied they were being sold to Libyan investors
Equity: (6) stellar growth continued though January ’08 showed an exposure to political undercurrents. Bounced back with branches in Nyanza, agricultural products and participation in the Safaricom IPO. Bought a Ugandan bank and are investing in S. Sudan in a diversification move they hope to take their model (bankign the unbanked) to more African countries.
Family Bank: (20) quiet year, but income tripled in ’08 and new CEO was confirmed
Fidelity: (33) who?, what?
Fina: (21) the Rwanda turf was invaded by a host of other Kenyan banks led by KCB. Continued a much heralded focus on SME‘s and expanded into Uganda.
First Community: (40) the second Shariah bank got off to a much quieter start than Gulf and will record a major loss this year from setting up operations.
Giro: (27) who?, what?
Guardian: (28) who?, what?
Gulf African: (36) new Shariah bank seems to be well received and respected by business people. Opened several branches and will also assist the GoK youth fund with loan products, but will make a loss this year from start-up costs.
Habib AG Zurich (24) who?, what?
Habib Bank (34) who?, what?
Housing Finance: (15) had a fully subscribed (just) rights issue that raised Kshs. 2.4 billion and Equity Bank now own ¼ of the institution.
Imperial (16) who? what?
India (17) who?, what?
I&M (12) new formal name for the former investment & mortgages bank, also got new shareholder capital (two euro dev banks) and opened new branches
KCB (1) Kenya’s top bank this year had another rights issue, rebranding and supported expansion to Uganda, Tanzania, South Sudan in addition to being cross-listed.
K-Rep: (23) surprising loss will be recorded as it appears the post election violence impact small enterprises they financed.
Middle East: (38) who?, what?
National Bank of Kenya: (9) went big in the Safaricom IPO (and to a lesser extent with Co-Op). Some activity expected nest year as the government and perhaps NSSF shares may be in play for a strategic investor now that their balance sheet is largely cleaned up
NIC (10): rebranded again this year, phasing out MOVE and establishing new branches as a one-stop shop for corporate, asset finance, investment banking (acquired Solid Stockbrokers) needs.
Oriental: (41) former Delphis bank should have an operating profit this year
Paramount Universal: (39) who?, what?
Prime: (13) a year of rapid growth for this bank, big with Asian business owners, but may need to raise matching capital next year
Southern Credit: (29) who?, what?
Standard Chartered: (3)steady, least aggressive of the big banks in Kenya went after the retail crowd this year with personal loans, cards and youth accounts. Will launch mobile app next year
Transnational (37) who?, what?
Victoria: (32) who?, what?

Major Stories
1. CBK eternally optimistic governor, lowered bond prices, lowered cash ratio and – but statistical /economic forecasts called into question, and mired in sale of the Grand Regency Hotel
2. Safaricom the bane of banking sector was M-pesa and the company’s IPO
3. Capital raising: through right issues, private placements and IPO (Co-Op) more are expected

Coming soon
banks expected in 2009
- UBA
- Faulu or KWFT

5 comments:

Anonymous said...

What is an aggressive off balance sheet?

fortySouth said...

A great, concise review. I'm wondering if we have any stats or indicators on what extent M-Pesa has taken up revenues or market share in the banking industry (in money transfer)? They contend that they complement rather than compete with the banks, but I'm not so sure. What do you think?

MainaT said...

Good summary.
The stand out banks still remain:
KCB-will become a regional powerhouse in the next few yrs if it can sort customer service and the new IT system delivers
Equity: Had an awesome Safacom enhanced yr, but 2009 is as critical a yr as 2004 was for Equity.
Citibank-isn't it in a very competitive nicche anyway?
Hope Faulu gets licence

coldtusker said...

I think BBK will try to take back #1 position (assetwise) since they increased their Tier 2 capital.

I&M Bank raised 3 tranches of cash in 2008
(1) DEG & Proparco bought shares for cash
(2) Bond Issue for 600mn (I think they regret not going for more) in 2Q 2008
(3) Rights Issue raised another 600mn in 3Q 2008

City Finance will likely merge with another financial institution - most likely a MFI - in 2009-10

NIC Bank took on some crazy bad debts on acquiring Solid. I want to see their annual report.

Habib Bank of Pakistan (owned 51% by AKFED) will eventually be merged with DTB. The logos use the same script & HBL bought the Rights that AKFED had during the Rights Offers.

Giro is ripe for a takeover once the financial crisis abates!

coldtusker said...

KCB - New IT system is causing huge headaches. Will it be sorted out soon?

Citibank remains a wholesale bank but they royally screwed up on safaricom!

Does UBA have a license or will they buy someone out?

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