1% Equals 20% and Other Bank Tales

The Central Bank of Kenya's Monetary Policy Committee has launched a KBRR a.k.a. the Kenya Bank Reference Rate and set it at 9.13%. All commercial banks and mortgage institutions are expected to price all their loan products around this. e.g Lend finance to customers at a rate of KBRR (+) or (-) "X" e.g. a loan rate of 15% will be known as KBRR +5.87%. This first rate of the KBRR set at 9.13%, will run from July 2014 to January 2015. 

The KBRR will help end the confusion that customers face with all manner of loans and rates at myriad banks. Different loans are pegged on interest rates that may be flat, fixed, variable, reducing balance etc and are marketed as the same without customers knowing what these measures mean. Yet a fixed loan rate of 1% per month (which some asset finance loans are marketed as) can be equivalent to a loan of 20% that is calculated using the reducing balance method.

The next step on the cards will be for Kenyan banks to adopt an APR (an annual percentage rate calculation) that not only includes the lending rate, but also factors in bank charges like commitment fees, facility fees, and third-party costs like legal charges, mortgage insurance, as well as a standard loan repayment schedule format for all loans.

Kenya Bank Rankings 2013 Part I

Ranked by assets (and placing in 2012)
                   

1 (1) KCB [Assets of Kshs 323 billion ($3.80 billion), and profits of Kshs 17.74  billion ($208 million)]
2 (2) Equity
3 (3) Cooperative
4 (4) Standard Chartered
5 (5) Barclays
6 (6) CFC Stanbic
7 (8) Commercial Bank of Africa
8 (9) Diamond Trust
9 (7) NIC
10 (10) Investment & Mortgages [Assets of Kshs. 110.3 billion ($1.3 billion), and profits of Kshs 6.05 billion ($71 million)]
11 (12) National
12 (13) Chase
13 (11) Citibank
14 (14) Bank of Africa
15 (15) Baroda
16 (16) Prime
17 (17) Housing Finance
18 (20) Family
19 (18) Imperial
20 (19) Ecobank
21 India
22 Guaranty Trust (formerly Fina)
23 ABC
24 Consolidated
25 Gulf African
26 Development Bank of Kenya
27 Equatorial
28 Victoria
29 Giro
30 K-Rep
31 Guardian
32 Fidelity
33 First Community
34 Habib AG Zurich
35 Transnational
36 Habib
37 Paramount
38 Credit
39 Jamii Bora
40 Oriental
41 Middle East
42 UBA
43 Dubai [Assets of 2.92 billion ($34.4 million)]

Banks on Social Media

This week, Equity Bank went live on twitter - and joined other top bank groups in Kenya in their use of social media to respond to customer issues. About half of Kenya's 46 banks are now on twitter ( see this list of local banks on twitter), but as the table blow shows,  the number of bank customers likely to use social media is a small fraction of the total numbers.

Social media stats on Kenya's largest bank groups

While Facebook is a powerful medium for banks to convey news and products promotions (some even tweet links to longer pieces or videos on Facebook, not their own websites)  and get feedback, twitter is equally as powerful on but for customers  as it gives them the ability to to tag a bank manager or CEO's or any widely watched trend such as  #twitterthumbsup (for good customer service) or #twitterbigstick for bad customer experiences. 

In the Bob Collymore era Safaricom has raced to be the acknowledged corporate leader in Kenyan social media with 363,337 Facebook fans and two widely followed twitter channels - including one dedicated to customer care issues with over 47,000 followers  - but this is a company with over 19 million customers.

Kenya Bank Rankings 2012 Part I

Ranked by assets (Placing in 2011)                   

1 (1) KCB [assets of Kshs 304.1 billion ($3.58 billion), profits of Kshs 15.75  billion ($185 million)]

2 (2) Equity 

3 (3) Cooperative 

4 (5) Standard Chartered    

5 (4) Barclays  

6 (6) CFC Stanbic 

7 (11) NIC     

8 (7) Commercial Bank of Africa

9 (8) Diamond Trust     

10 (9) I&M [assets of Kshs. 91.5 billion ($1.07 billion), profits of  Kshs 4.72 billion ($55.5 million)]

11 (10) Citibank 

12 (12) National Bank

13 (15) Chase    

14 (13) Bank of Africa    

15 (14) Baroda   

16 (16) Prime    

17 (17) Housing Finance    

18 (19) Imperial    

19 (18) Ecobank     

20 (21) Family Bank  

21 (20) India   

22 ABC    

23 Consolidated Bank     

24 Fina   

25 Equatorial   

26 Gulf African    

27 Development Bank   

28 Giro    

29 Fidelity   

30 Guardian     

31 Victoria    

32 First Community     

33 K-Rep    

34 Habib AG Zurich  

35 Transnational     

36 Paramount     

27 Habib Bank     

38 Credit Bank     

39 Oriental     

40 Middle East     

41 Jamii Bora    

42 UBA     

43 Dubai [assets of Kshs 2.58 billion ($30.4 million)]

2011 Kenya Bank Rankings Final Word

Local banks rules, but KCB holds off Equity

The top local Kenyan banks as at December 2011, ranked by assets are:

6 (6 last year) CFC Stanbic Bank: Steady assets of Kshs 140 billion ($1.7 billion) and profit of Kshs 3.1 billion ($38 million)

5 (4) Standard Chartered: Assets up 15% to Kshs 164 billion , and profits went up 8% to Kshs 8.25 billion. Deposits grew 22%, and loans went up 48% as they halved their government securities to Kshs24 billion. (Barclays & KCB also reduced their government securities positions compared to December 2010)

4 (2) Barclays: Drop from 4 to 2, but still have the best return on assets at 7.18% on a slightly smaller asset base of Kshs 167 billion. Profits went up 11% to Kshs 12.01 billion, and loans went up 14%, but there was no change in deposits.

3 (3) Cooperative: Was leap-frogged by Equity Bank, but gained a place thanks to shrinking Barclays. Steady but slow growth as assets grew by 9% to Kshs 167 billion, deposits grew by 15% and profits by 11% to Kshs. 6.16 billion as the bank still seeks to move beyond the cooperative sector.

2 (5) Equity Bank: Leap from No. 5 to 2 after reporting assets of Kshs. 177 billion and profits of Kshs. 12.1 billion, signifying growth of about 32%. for each. The years of annual 100% growth are over but as John Staley the Director of Mobile Banking and Payment Innovations, told attendees at HP leadership event dubbed Staying Ahead of the Pack, the bank has grown ten-fold every five years leveraging on technology and always with the mission to provide affordable financial services which they now plan to take beyond Uganda and Sudan.

No.1 (last year No. 1) KCB assets of 282 billion ($3.45 billion) and profit of Kshs. 14 billion ($172 million) KCB remains at number and matched Equity, growing deposits by 29%, loans 31%, and profits by 22%.

2011 Kenya Bank Rankings

Comparing to last year with the 2010 top banks

11. NIC and National Bank (No. 7 last year) both with Kshs. 70.2 billion ($790 million) in assets and profits of about Kshs. 2 billion as at September 2011. National Bank falls from No. 7 as it has been passed by some fast growing banks on the list. Quiet year, NBK has grown it's loan book by 52% compared to a year ago, but had less profit than last year which is odd for most banks. NIC is about 28% larger than a year ago in asset and will have about 3.75 billion in profit for 2011

10. Citibank Kenya (9. last year) September assets of Kshs. 71.6 billion and profits of 3.25 billion in another quiet year for the bank.

9 Diamond Trust (10) September assets of Kshs. 74.6 billion and profits of 2.4 billion deposits up 35% and loans up 45% from a year ago but with expenses growing at a slightly faster pace than income .

8. Commercial Bank of Africa (8) with September asset of Kshs. 75.7 billion and profits of 2.04 billion. Corporate bank made new came under political rad on the banking side, opened new branches in new malls in Nairobi like Junction, Galleria and then has re-branded in October with new logo. as excepted a rights issue is planned to right a capital adequacy position

7. Investment & Mortgages (last year 11) September assets of Kshs. 79.5 billion and profits of 3.2 billion in a quite year for the bank except for its' rapid growth and entry into mortgage finance.

6 CFC Stanbic (6) September assets of Kshs. 145.2 billion and profits of Kshs. 2.38 billion. The bank just announced a rights issue. Earlier in the year, has some board changes with new Chairman, and this is the first year of separation of the assets of the insurance from the banking

5. Standard Chartered (4) September assets of Kshs. 165.7 billion and profits of Kshs. 5.49 billion. This is one of the few banks to have a lower profit than a year ago (Kshs 6.1 billion). Opened new headquarters, but it's automation of customers service has led to some customer frustration - retail and corporate

4. Cooperative (3) September assets of Kshs. 167 billion and profits of Kshs. 5.45 billion. East African Newspaper this week announced that they will withhold divided to finance capital growth and postponed a planned rights issue to 2013 - and it was awarded best bank in Kenya by the Financial Times of London

3. Equity (5) September assets of Kshs. 172.6 billion and profits of Kshs. 8.25 billion. Another award winning year for the bank who pioneered agency banking model which has been followed by KCB and Co-Op. In the news doe accolades for their CEO, a deal to collect park fees for the Narok Council in the Masai Mara, becoming the latest Kenyan bank to diversify to Rwanda, but also for an about turn with the rest of the banking sector when they raised their lending rates from 15% to 25%

2. Barclays (2) September asset of Kshs. 180.9 billion and profits of Kshs 8.9 billion. A quiet year of modest growth for the bank in danger of being overhauled by Equity

1. KCB (1) September asset of Kshs 273.9 billion and profits of Kshs. 8.6 billion. Increased it's gap from Barclays, and matches Equity’s reduced growth rate. Emphasized connectivity across East Africa, had a management shake up - and with i's regional presents, it has assets of Kshs. 322 billion ($3.6 billon) and profits of Kshs. 9.1 billion ($103 million)

Kenya Bank Rankings 2010: Final Word

From the earlier estimates now there’s a complete list of the published accounts for all commercial banks as at December 31 2010.

1 (1) KCB: Assets of Kshs 223024 ($2.69 billion) [pre-tax profit of Kshs. 11.53 billion ($139 million)]
2 (2) Barclays
3 (4) Cooperative
4 (3) Standard Chartered
5 (6) Equity
6 (5) CFC Stanbic
7 (7) Commercial Bank of Africa needs to raise capital?
8 (14) Investment & Mortgages overhauls Citibank, National Bank, Diamond Trust and NIC
9 (9) Citibank
10 (8) National Bank of Kenya
11 (10) Diamond Trust
12 (11) NIC
13 (13) Prime Bank
14 (14) Baroda
15 (15) Housing Finance
16 (19) Ecobank
17 (16) Bank of Africa
18 (21) Chase
19 (20) Family Bank
20 (17) India
21 (18) Imperial
22 (--) Kenya Women Finance Trust (DTM) new deposit taking micro-financed [assets of Kshs 18.9 billion and pre tax profit of Kshs 464 million ]
23 (22) Fina Bank
24(24) Development Bank of Kenya
25 (29) Consolidated
26 (34) Equatorial (acquired Southern Credit)
27 (23) ABC
28 (28) Giro
29 (25) Gulf African (Kenya's first Sharia bank breaks even in third year)
30 (31) Fidelity
31 (26) Habib AG Zurich
32 (30) Guardian
33 (27) K-Rep
34 (34) First Community Bank
35 (32) Victoria
36 (33) Habib Bank
37 (38) Transnational
38 (41) Oriental (boosted by other income)
39 (37) Credit
40 (40) Paramount
41 (36) Faulu Kenya: (new deposit taking micro-finance institution) [assets of 4.3.9 billion and pre tax loss of Kshs 164 million ]
42 (39) Middle East
43(43) UBA: slow start in Kenya, but finally started lending
44 (42) Dubai Bank
45 (44) Jamii Bora: formerly city finance bank, and was acquired by microfinance company Jamii)

2010 Kenya Bank Rankings Part II

Comparing to last year’s Top 10 list.

I&M Bank: Sits, at number eleven, for the year, just outside the top 10, but made more profit than two of the top banks . I&M had an exciting year, with a November rights issue targeting to raise Kshs 2.4 billion ($30 million); they also launched an e-commerce platform, bought stakes in banks in Mauritius and Tanzania and got investment funding from Proparco & DEG.

10. Diamond Trust (2009 rank 10): Assets of Kshs 58.2 billion ($727 million) and nine month profits of Kshs 2.3 billion ($29 million) – had growth across the board of 30% compared to a year ago and with a good income outlook and very low NPA. Expanding to Burundi while other banks have headed to Rwanda, and Chairman stepped down to take up similar post at the revived Air Uganda.

9. Citibank Kenya (2009: 7): Assets of 63.9 billion ($798 million) and nine month profits of 2.15 billion ($27 million). A quiet year for the bank but ramped up in Q3 this year and that will impact year-end numbers, which were flat before that. MD Ade Ayeyemi moved on to other bank operations, and the bank has been unable to shake off local stockbroker allegations that they are holding Safaricom IPO refunds from investors since 2008

8. Commercial Bank of Africa (2009: 9): Assets of 65 billion ($813 million) and nine-month profits of 1.9 billion ($23.7 million) . A quiet year for the bank which has grown by about 40% since a year ago, but which will soon have to raise compliance capital from its shareholders.

7. National Bank of Kenya (2009: 8): Assets of 67.4 billion ($842 million) and nine month profits of 1.9 billion ($24.8 million). And has ramped up lending including mortgages and seen improved profits. The replacement of long serving CEO is up in the air are Government plans to privatize the bank with plans shifting toward private investor as opposed to offering more shares to the public

6. CFC-Stanbic (2009: 6): Assets of Kshs 104 billion ($1.3 billion) and nine month profits of 1.5 billion ($18.8 million). The sleeping giant created by the merger of two mid size banks is still treading, and though with improved profit, they are still the lowest of the top 10 banks.

5. Equity Bank(2009: 5): Assets of 129 billion ($1.61 billion) and profits of 6.8 billion ($84 million) . For the second year slightly reduced growth to 40 - 50% not the 100% of years past. The bank had a shift in direction towards an agency branch model using mobile phones to reach its 5 million plus customers, and after the rapid growth of m-kesho ( a partnership with Safaricom,), they have in the last two months also signed on with Orange and Essar, tying up 3 of the 4 Telco’s with mobile money.

Diversification has been a mixed bag, with good results from Sudan and M-kesho, but not so (yet) with Uganda, investment banking, and Housing Finance, which while initially unwelcome it appears that HF shareholders would now welcome a merger. Still, this could be the year they clinch the highest profit crown in the Kenya banking sector.

4. Standard Chartered (2009: 3): Assets of 134.6 billion ($1.68 billion) and profits of Kshs 6.1 billion ($77 million) in nine months. Had an over-subscribed rights issue and took over the custody business that Barclays sold in Africa. They make good money from corporate loans and from government securities – they have almost as much paper ($650 million) as they do in customer loans.

3. Cooperative Bank ( 2009: 4): Assets of 141.1 billion ($1.76 billion) and nine-month profits of 4.3 billion ($53.7 million) . overall growth of ~40% with group assets about the same, and diversification has included buying stake in CIC insurance, stock broking and have talked about going into South Sudan and other East Africa countries

2. Barclays(2009: 1): Assets of 177 billion (2.2 billion), with nine month profit of 7 billion ($87 million). This big bank has nowhere to go, with growth of 5% from a year ago, can they buy up some smaller banks? They shed their Africa custody business to standard chartered and got into an m-pesa banking partnership belatedly after pushing their own mobile money platform for two years.
Site of planned KCB new HQ building, opp Equity Bank Centre, Upper Hill Nairobi
1 KCB (2009: 2): Assets of Kshs 218.2 billion ($2.72 billion) and nine month profit of 6.39 billion ($80 million). Had a rights issue earlier in the year, that raised $156 million and they plan to put up a new headquarters in upper hill. But with total group assets of 244 billion, the bank was third in profit behind Barclays and Equity after Q3.

2010 Kenya Bank Rankings Part I

Ranked by total assets at September 2010 and compared to 2009 rank (in brackets)

--missing is Southern credit (32 last year) which was bought by Equatorial in 2010
43 (43) Jamii Bora *formerly City Finance
42 (42) Dubai
41 (--) UBA Kenya *new
40 (39) Middle East
39 (41) Oriental
38 (40) Paramount Universal
37 (37) Credit
36 (38) Transnational
35 (34) Habib Bank
34 (36) First Community
33 (31) Victoria
32 (33) Fidelity
31 (25) K-Rep
30 (28) Guardian
29 (26) Habib AG Zurich
28 (27) Gulf African
27 (30) Consolidated
26 (23) ABC
25 (29) Giro
24 (24) Development Bank of Kenya
23 (35) Equatorial *merged with Southern Credit
22 (22) Fina
21 (19) India
20 (20) Family Bank
19 (18) Ecobank
18 (16) Imperial
17 (21) Chase
16 (17) Bank of Africa
15 (15) Housing Finance
14 (14) Baroda
13 (13) Prime
12 (11) NIC
11 (12) Investment & Mortgages

Kenya's Top Banks

as at June 2010

Bank Assets Pre-Tax-Profit
1. Barclays Kshs 173 billion ($2.16 billion), profit of Kshs 4.75 billion ($59.3 million)
2. KCB assets of Kshs 207 billion ($2.59 billion), profits of Kshs 4.34 billion ($54 million)
3. Equity 117,578 4,282
4. Standard Chartered 131,348 4,037
5. Cooperative 133,322 2,848
6. Diamond Trust 54,109 1,508
7. Citibank Kenya 63,812 1,499
8. Commercial Bank of Africa 60,229 1,465
9 Investment & Mortgages 56,630 1,239
10. National Bank of Kenya assets of 59,390 million ($742 million) and profits of Kshs 1,200 ($15 million) - then CFCStanbic (falling out of the top 10), NIC, Baroda, Imperial, and Bank of India.

Notes- KCB is the largest bank (and group) but is less profitable than Barclays which is the most profitable bank
- Equity may be the most profitable bank by next year: Five years ago (2006) they had 1/6 (Kshs 500m) of Barclays profits (Kshs 3 billion), now mid-way into 2010, they are the country's 5th largest in assets, and 3rd in profits - and are about 7X large by both measures compared to five years ago, while KCB is 1.5X larger and Barclays is 0.5X larger than it was in 2006.
- Equity is perceived better in market terms than KCB though its half its size and has the same profits this year.

Changes since last year
- Credit sharing between banks is now being enforced
- Anti-money laundering law now in effect
- The Government of Kenya has set out to raise Kshs 31 billion ($388 million for infrastructure projects; Kenyan banks currently have almost half as much money invested in government securities as they do with loans to customers
- The new constitution passed this month means we will have currency without the face of a president (virtually all existing currency bear the portraits of Kenya's past presidents)

- Equity and several other Kenyan banks have decided to embrace and work with M-Pesa and other mobile money channels instead of fighting them
- Micro-finance institutions (MFI's) are stepping up into the commercial banking sphere

Incoming banks (all of which have micro-finance origins)
- Faulu Kenya
- Jamii Bora (formerly City Finance)
- KWFT

Gone banks
- Southern Credit (bought by Equatorial)
- S&L (absorbed into KCB)

Kenya Bank Rankings 2009: Final Word

From the earlier estimates now there’s a complete list of the published accounts for all commercial banks as at December 31 2009.

Bank Assets Profit before tax
1. KCB assets of Kshs. 172,384 ($2.23 billion) [pre-tax profit of Kshs. 6,426 ($83.4 million)]
2. Barclays
3. Standard Chartered
4. Cooperative
5. CFC Stanbic
6. Equity Bank assets of 96,512 [$1.25 billion) and [5,627, $73 million profit]
7. Commercial Bank of Africa
8. National Bank of Kenya
9. Citibank Kenya
10. Diamond Trust
11. NIC
12. Investment & Mortgages
13.Prime
14.Baroda
15.Housing Finance
16.Bank of Africa
17.India
18.Imperial
19.Ecobank Kenya
20.Family Bank
21.Chase
22.Fina
23.ABC
24.Development Bank of Kenya
25.Gulf African
26.Habib AG Zurich
27.K-Rep
28.Giro
29.Consolidated
30.Guardian
31.Fidelity
32.Victoria
33.Habib Bank
34. Equatorial
35. First Community
36. Faulu Kenya
37. Credit
38. Transnational Just concluded a rights issue
39. Middle East
40. Paramount Universal
41. Oriental
42. Dubai
43. UBA Kenya new in Kenya
44. City Finance acquiring muicro-financeier
-- Southern Credit being bought out by Equatorial

Capitalization in Bank Mergers

Today should see the announcement of a merger between Southern Credit and Equatorial Commercial (ECB) banks.

They are both yet to release their full year results for 2009, (have until Thursday) but this will likely be a loss year for Southern (Kshs. - 145m in 9 months) ahead of the combination of the 32nd (Southern) and 35th (equatorial) ranked banks in Kenya with combined assets of about Kshs. 9.3 billion ($120 million) - but which were not growing as fast as their smaller peers in the competitive Kenyan market with 44 commercial banks.

The Nairobi Star today reports that the reason for the merger as the need for Southern Credit to raise their capital to the Kshs 1 billion mark after a deal with foreign investors had fallen through and this amount will be the combined capital size of both banks. The article further describes this as a takeover of Southern - a bank with structures but no capital by ECB - which is a bank with capital but no structures

Elsewhere, in the Market Whisperer [offline] column of last week’s East African newspaper shoots down the justification behind a market rumour of Equity Bank’s (valued at $787 million) interest in acquiring National Bank of Kenya (valued at $133 million) as two over-capitalized banks who don’t need each other.

It notes that NBK which was restructured by the Kenya Government is in essence still a government banker beholden to government securities which account for majority of its income, rather than traditional lending while Equity is struggling to lend out its huge capital infusion and already has a (much) larger distribution and product range than NBK.

Kenya Bank Rankings 1968 Edition

From reading a 1968 book Who Controls Industry in Kenya - a report of a working party comes some history of the Kenyan banking sector. It mentions that in 1968;

- Kenya had 10 banks and all but 3 banks were foreign bank off shoots.
- They had given loans of loans of £70m, deposits of £83m – a book ratio of 83% - compared to US or US which had rations of between 33% to 50%
- Depositors received 3-4% interest on deposits, and paid interest of 7-8% on loans [today deposit rates are about the same but loan borrowers pay 12 - 25%]

There were two tiers of banks then;

The Big 3 Banks which 3 held 80% of deposits and 85% of bank assets amounting to K£111 million in 1966 were
- Barclays Bank – had assets of UK£1.4 billion and had 83 branches, and Kenyan directors included Michael Blundell, S. Waruhiu and J. Opembe. Today it has 111 branches
- Nation & Grindlays (now KCB) had assets of UK £401 million and after tax profit of £1.2 million. It had 50 branches, and 16 directors who were all British. Today KCB has 165 outlets in Kenya
_ Standard Bank (now Standard Chartered) with assets of UK £892 million and a net profit of £3.1 million. It had 41 offices, 22 directors all British.

Next 7 Banks
- Bank of Baroda
- Ottoman bank
- Bank of India
- African Banking Corporation (subsidiary of standard bank)
- Commercial bank of Africa
- Algemene bank (General Bank of Netherlands)
- Habib bank

Other institutions
- Cooperative Bank of Kenya (established in 1967)
- National Bank of Kenya (established in 1968)

Finance houses
- Big 3 (licensed as banks)

- National industrial credit (then 40% owned by Standard Bank, now NIC)
- United Dominions Corporation
- Credit finance company (now CFCStanbic)

Others registered as ordinary companies
- Transaction finance corporation (subsidiary of cooper motor corporation CMC)
- Industrial promotion services (Now IPS, was est. in 1963 by the Aga Khan)
- Africindo industrial development (powerful Asian industrialists seeking credit facilities for exports o India with training for Kenyans there)

Development corporations
The big 3 commercial banks also owned development corporations to undertake longer-term investments than normal banks accepted; these were Barleys Overseas Development [assets of B£9m and 88 projects in east Africa], National & Grindalys Finance and Development [B£3m] and Standard Bank Development Corporation

Building societies
As at 1964 they had loaned k£3m more than they had in deposits; this was after sudden withdrawal in 1959 of £4m savings by European and Asian depositors
- Savings & loan society
- East African building society
- First permanent (east Africa)
- Kenya building society (subsidiary of commonwealth development corporation CDC)
- housing finance company of Kenya (now Housing Finance)

2009 Kenya Bank Rankings Part III - Other Intermediaries

In Part 1 was a list of all banks and Part 2 had the top 10 banks in Kenya this year. There are other financial intermediaries of note including:
UBA: launched in Kenya With a capital base of about 1.1 billion and now have 3 branches in Nairobi. UBA is reaching out to customers, embracing new media like blogs and twitter, - (@ubagroup and has gotten new funding - would rank in the low 20-soemthign of Kenyan banks after just a ½ year of operations
Faulu: Faulu Kenya Was licensed in July 2009 as the first deposit taking micro finance institution by the central bank of Kenya. Its balance sheet today would be about 6.5 billion, with over 2 billion in loans (last accounts seen are 2007)
KWFT: even larger than Faulu, is the Kenya Women Finance Trust. Its assets would be in the region of Kshs 15 billion, with about 12 billion in loans (extrapolating from 2008 accounts).
KWFT which is in government plans to convert to a women only commercial bank already has a national footprint or branch network that rivals any of the larger commercial bank and would rank somewhere in the teens of bank rankings

other intermediaries

SACCO's: The Central Bank of Kenya estimates assets of the entire banking sector at Kshs. 1.18 trillion ($17 billion - CBK Governor speech in September 2009) while the Ministry of Cooperative Development estimates assets of the cooperative sector (SACCOS), with 12,000 societies and 8 million members at about 200 billion ($2.7 billion) - whose members save funds and borrow against these along with guarantees from other members in lieu of traditional bank collateral.

Some of the notable large SACCO’s (comparable in size to small & mid-size banks, but with larger customer bases) in the country are:
1. Harambee SACCO: (mainly civil servants) –with assets of 12 billion ($160 million), and loans of 7.5 billion and said to be the laregst SACCO in Kenya
2. Mwalimu SACCO: (mainly school teachers) with assets of 10.2 billion and loans of 9.2 billion
3. Afya SACCO: (mainly health industry workers) - assets of 4.75 billion, and loans of 3.79 billion
4. Kenya Bankers SACCO: bank industry workers with 3.3 billion in assets 2.8 billion in loans

2009 Kenya Bank Rankings Part II

10. Diamond Trust (2008 rank 11) : assets of 44.9 billion ($600 million) and nine month profits of 1 billion ($14.2 million). Loans (28.6 b) grew faster than deposits (33.1b), but expenses also grew faster than income. Neck and next with NIC and I&M banks with 44 and 41 billion in assets in position 11 and 12 respectively.
9. Commercial Bank of Africa (7): assets of 52 billion and nine month profits of 1.39 billion. Deposits flat (40 b) but loans (28.2 b) are up 20% this year and with GOK paper up 77%, however income and expenses are lower than 2008.

8. National Bank of Kenya (9): assets of 55.2 billion and nine profits of 1.4 billion. The bank is in great demand with a planned further divestment by GoK which may attract significant interest next year. For 2009, NBK has had a remarkable 40% growth this year, with 27% loans (12 b) and 48% in deposits (41 b)

7. Citibank Kenya (8) assets of 55.6 billion ($742 million) and nine month profit of 2.3 billion ($31 million). while embattled in the US, Citibank had a slow down in growth of loans (22.7 b) and deposits (29.7 b) compared to ‘08 but will still record a healthy +20% growth for year 2009.

6. CFC Stanbic (4) assets of 83.5 billion and nine month profits of 981 million. Bank had no growth in loans (43 b) and assets, but sitting on a load of cash - almost 16b billion (~$214 million)

5. Equity Bank (6) assets of 92.4 billion and nine month profits of 4.2 billion. Equity is still one of Kenya’s fastest growing banks though the 100% growth margins have tapered off to more manageable 30%+ for loans (55 b)and deposits (63 b) as it expands regionally in Uganda and Sudan and continues to roll out unique banking products.

4. Cooperative Bank of Kenya(5) with assets of 98 billion and nine month profits of 2.9 billion. The bank continues its 20%+ annual growth a year after listing and has diversified into investment banking. However their re-jigged executive shareholding following n ESOP is a sore point to be debated further.

3. Standard Chartered 3 with assets of 122 billion ($1.6 billion) and nine month profits of 5.2 billion ($69 million). Despite my earlier negative outlook, stanchart was a late bloomer and has come on strong: significantly, unlike other big banks, stanchart grew faster this year compared to 2008 - with 18% growth in deposit (89 b) and loans (40 b) while profits are up by 40% as income is up 23% compared to just 5% for costs while spearheading technologial products & services to their customers. Also increased investment in government securities by 77% and holds ~ Kshs. 36 billion now.

2. KCB (2) assets of 163 billion ($2.17 billion) and nine month profits of almost 5 billion ($66 million). KCB group is larger than Barclays in assets (185 b to 168 b) but has a smaller asset base than last year. In 2009 deposits (133 b) and loans (93 b) are up over 20% but profit is up just 3% - income is up 11% but expenses are up 15%, as KCB continued its expansion, opening six branches in November and also expanding in Rwanda Uganda, South Sudan and soon to Burundi. The bank also continues to weather occasional storms against it sustainability with triton and now Kenya planters coffee union.

1. Barclays Kenya (1)assets of 168 billion ($2.25 billion) and nine month profits of 6.63 billion ($88 million) . Barclays shrunk by 2% compared to growth of 17% a year ago with lower deposits (123 b) and loans (96 b) compared to a year ago but with profits ahead of last years pace, perhaps boosted by GoK securities investments which are up 23% this year.

2009 Kenya Bank Rankings Part I

ranked by assets (2008 placing in brackets)
43(43) City Finance
42(42) Dubai
41(41) Oriental
40(39) Paramount Universal
39(38) Middle East
38(37) Transnational
37(35) Credit
36(40) First Community
35(30) Equatorial
34(34) Habib Bank
33(33) Fidelity
32(29) Southern Credit
31(32) Victoria
30(31) Consolidated
29(27) Giro
28(28) Guardian
27(36) Gulf African
26(24) Habib AG Zurich
25(23) K-Rep
24(26) Development Bank of Kenya
23(25) ABC
22(21) Fina
21(22) Chase
20(20) Family Bank
19(17) India
18(19) Ecobank/EABS
17(18) Bank of Africa
16(16) Imperial
15(15) Housing Finance
14(14) Baroda
13(13) Prime
12(12) Investment & Mortgages
11(10) NIC

Salute to Kenyan Stockbrokers Part I

Salute to Kenyan stockbrokers, investment banks and fund managers, and the capital markets authority (CMA) for their moves to improve transparency at the NSE of late.

When the new rules were announced early this year, few doubted that licensees (especially stockbrokers would comply, but the early signs are good.
One of the milestones was for the publication of financial statements by Collective Investment Schemes, Stockbrokers, Dealers, Fund Managers and Investment Banks twice a year; and this they did, many baring their losses, some with dubious figures or cosmetic summations, and some omitted profit & loss, but which their auditors will hopefully be able to reconcile at the end of the year.

The compliance was notable in that the intermediaries were able to publish their June 2009 summarized financial accounts,

Investment Banks: 100% (missing was Juanco (now Equity IB?), while FCB Capital was only licensed in June 09)
- Stock Brokers: 100% (missing was Discount (collapsed), Bob matthew (is now KingdomSecurities), while African Alliance is now an investment bank)
- Authorized Security Depositories: 100% (all 12 are commercial banks)
- Collective Investment Schemes: 100% (all are fund managers)
- Fund Managers: 94% (missing was Aueros, while African Alliance reported as an investment bank, and amazingly CIC who were licensed in June 09 already complied)
- Investment advisories 10% they are not required by the law to report, but Dry Associates and Tsavo Securities did

The results were harsh (more on that later) as the downturn at the Nairobi Stock Exchange has had a shocking effect on these companies. But they have recognized that and started taking measure in the form of mergers, re-capitalization staff reductions. When the NSE improves, they will reap the dividends. The signs are good for frontier markets and African markets, but the Kenyan political scene is still a cause for concern for the recover of the NSE and its brokers.

Reading the Tea Leaves at Stanchart

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

Kenya Bank Rankings 2008 Part II

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)