Saturday, April 03, 2010

Kenya Stockbrokers 2009 Financial Summary

Like at the end of august when they started providing their interim unaudited results Kenya’s stockbrokers and investment banks have continued with this now, and thanks to the CMA/regulator they have largely gone ahead and published their full year audited accounts for 2009 by the March 31 deadline.

Investments Banks: Best were Kestrel Capital (income of 148m and profit of 24m), Standard IB (income 121m, profit 40m) and Afrika IB (income 40m, profit 20m). Shock was CFC Stanbic Financial Services (CSFS) with a basket of income form brokerage, advisory, fund management and interest totaling 137m but still lost 108m after paying salaries of 123m highest in the industry. The same was seen at Renaissance (Income of 113m, lost -147m after paying 106m salaries) Equity IB looks like a mi-step for Equity Bank (high profile staff hires have since departed) and it had virtually no income (6.7m unrealized investments), and lost -57m in 2009. The disclosure separating client cash from bank cash are illuminating, and one can see that IB’s all have high debtors and creditors, resulting in some like Dyer & Blair carrying overdraft positions and the 44m paid in financial costs contributed to the -88m loss. Best off directors are Kestrel, Renaissance, Genesis and overall of the 19, ½ lost money

Stockbrokers Best was Genghis with income of 31 million and broke even with a ½ million profit while, Reliance, and newcomers NIC Capital, Kingdom and ABC Capital all lost money. Ngenye Kariuki did not file as it was placed under statutory management. Most of the five remaining stockbrokers have 251 million in intangible assets to prop up their balance sheets (which range from about 300 to 450 million) and significant amounts of receivables.

Fund managers: best was Stanbic Investments with income of 398m and profit of 124m, and then Genesis with income of 126m and profit of 31m then Co-Op Trust with profit of 19m. Other higher income earners, but who lost cash in the year included AIG income of 192m (lost -46m), British American Asset Managers 122m (-38m), Old Mutual Investment Group 168m (-5m) and Old Mutual Assets Managers 150m (-35m). Overall of the 14 asset managers, 50% were profitable including Aureos, Co-Op Trust, ICEA Asset Managers, Investeq while Stanchart and Zimele just about broke even. Unit Trusts Old Mutual Investment Group 7.6 billion (5 funds), BAAM funds manger about 5.7 billion (5 funds) , African Alliance (IB) 1.4 billion (5 funds), ICEA 782 million (3 funds, Stanchart 303m (2 funds), and Zimele 390m (2 funds), Dyer & Blair IB 50m (2 funds), Standard IB 11m (3 funds) Fund managers recently formed their own fund managers association lobby group separating themselves from KASIB for stockbrokers and investment banks.

Investment advisors: only one left is Tsavo after Dry has converted into an investment bank and Jani have withdrawn their license. Tsavo had commission income of 13m and a profit of 6m

Conclusion: The pictures has not been pretty, but this painful period of disclosures will hopefully lead to an improvement of their governance and management to stop the pattern of having one stockbroker collapsing every year by highlighting issues of high receivables and payables, insider borrowing, directors pay etc.

With the improved activity at the stock market in 2010, the pattern should be better than what they reported. This is a good time for IPO's and for companies to raise funds 2010-2011 for reasons known elsewhere and this will benefit the stockbrokers who will perhaps have a better 2010 than 2009.


kainvestor said...

Surely a few IPO's would be good for brokers revenues. But these numbers don't give investors confidence in the NSE and their dealings with investors in the recent years hasn't been anything but imperfect. We hope they'll improve on these in 2010.

Dan Githua said...

Very well analyzed. Good for investors to look behind the curtains of some of the supposedly 'large' investment banks.

Grains of masala said...

Good Stuff Banks!

Any chance for mergers after the (not so sweet) revelations?

Edwin Abuga said...

Thanks for the info man.

bankelele said...

kainvestor: yes it doesn't. so far only NBK seems to be coming after Pipleine imploded. Plus with the new KYC rules its hard to see another free for all safaricom-type IPO where anyone and their dog could apply for shares (the brokers themselves can see how the reconcilation of that mess has cost them)

Dan Githua: staff/talent seems to be a key plank - no matter whether a broker is large or small

Grains of Masala: it will take a while, and the banks that bought in last year are still digesting
Edwin Abuga: karibu

Change Your T said...

Great info and analysis. Thanks sir.

MainaT said...

If brokers can't make money, I don't know who can.

evision said...

i've gone through this blog. i found it really interesting. nowadays im working and also studying in reputed college.

online business

mystic said...

good info,

would be nice if tz and ug brokers also publish their results so the common mwanainchi can know which ones to avoid


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