Bank Review ‘07: Part 1

the bottom 5

The low end of the banking sector showed little growth in loans or deposits – bank sizes are stagnant.

40. City Finance: (last year 42) Estimated assets of 650 million shillings ($9.28 million) and loss of 20 million shillings in 2007. Kenya’s smallest bank was taken over by the Baraka Fund late in the year, and is expected to be recapitalized and turned around from 2008.

39. (41) Dubai: Estimated 1,480 million assets, profit of 10m shillings.
Growth of about 3% this year, but the bank will have achieve a smaller profit than last year. Its niche branch in Eastleigh and foreign remittance product has found increased competition.

38. (40) Oriental: Estimated 1,732m in assets and profit of 200 million. The perennial loss making Oriental bank (formerly BCCI and Delphis) was recapitalized and is on track for a profit this year following a payment from the Governments’ financial restructuring of Miwani Sugar company which owed the bank a significant debt.

37. (39) Paramount Universal : Estimated 2,258 billion and profit of 45 million. Growth in assets, deposits, and loans flat this year but at least is profitable.

36. (37) Transnational: Estimated 3.03 billion ($43 million) in assets, and 90 million ($1.3m) in profit for 2007. A quiet year for the bank which introduced a Fanikisha product for customers to save money and buy IPO shares on the NSE

Bank story of the week

Which way Equity?: It’s rare to see two sides of a story from the same editorial team – but it has happened on the controversial shielding of Equity Bank’s new shareholders with the Nation newspaper editorial defending the exemption granted by the Finance Minister, after the influential Business Daily editorial (sister newspaper in the Nation Media Group) had strongly opposed the same.

History Repeats

It is now acknowledged that commercial banks have put the ghost of bad debts behind them and have moved on to new clean lending books. However a lot of the decline in non-performing assets can be attributed to an increase in the overall loan book (not really a decline)

Also, the future may not be without a repeat if you fast forward two years from now when a fraction of the unsecured loans being hawked at anyone with a pay slip now will likely have gone bad. With the passage of the in duplum rule banks have to cut their losses and begin collection efforts as soon as they realise a loan is in trouble.

But the courts are clogged and it is difficult to collect from unsecured loans as there are no assets to recover and where the amounts being pursued are not worth the legal cost in money and time.

Other recent happenings

- Diamond Trust (Kenya) to participate in rights issue of Diamond Trust Tanzanian where it owns 33%
- Equity bank growth getting super heated?
- Family Bank is Kenya’s newest bank
- Housing finance new product for first time homeowners
- Kenya Commercial Bank gets a new CEO
- Perennial loss maker Oriental bank (formerly Delphis) is on track for a profit this year following a restructuring deal at Miwani Sugar.