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%.

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 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.

Twitter Week: KQ Strike and Equity Profit Dips

Twitter is a micro-blogging tool that is relly nifty for doing mini-posts, forwards and other remarks that (are on any subject) and are maybe not worthy of a full blog post. Here’s a summary of my week on Twitter:

- @coldtusker @kenentrepreneur the tea board of Kenya wishes to remind you that hawking of green tea leaf is
- Signed up too many usgov twitters to keep with #hilaryafrica. Will edit after her trip
- This is a good time for generator and diesel sale companies. I think there was a tax break for generator sales mentioned in uhuru's June budget speech. No power last night, or this afternoon: will ignore the power ration schedule as a work of fiction KPLC. As bad as Nairobians complain about #KPLC the water crisis is of more concern
- R/T @shiroh the Stanchart diva trip is such a deal. $1,000 for 5 (shopping) days in South Africa for Ladies (incl, flights, hotels)
- Ethiopian Airlines net profit was $118 million, revenue up 33% with new airbus & Boeing orders pending. R/T @Jellyfish78 Kenya Airways vs. Ethiopian Air on Youtube is an informative but nasty spat http://bit.ly/13N34f and http://bit.ly/CM7Np. Also Ethiopian Air to fly Addis-Mombasa (via Kilimanjaro) http://bit.ly/OHsGq
- Diasporans giving up on Kenya http://bit.ly/K78g7
- Tahidi High tackles the mystery of paraffin in high school food
- On CitizenTV Delamere family shot live video in court and in jail. How? Still it’s a good spot light on the archaic judiciary. Delamere’s say Kenyatta family owns their dairy now while neighbours want to grab their 56 000 acre farm. Tom delamere testimony live - shot two dogs with two shots and denies he shot the man who died. How did 'top lawyer' tom ojiambo allow this?
- R/T @milonare Impunity starts with you, remember that when you cut in traffic and feel nothing. We reflect our leaders #fractals #Kenya
- Barclays Kenya raising credit card rates to 3.0% (up from 2.5%) from next month
- r/t @mainat Banks have reduced lending not because of interest rates but poor prospects of recovering loans in an economy that has stalled
- @rookieKE if you bank with consolidated, you can transfer cash from A/C to Mpesa using your phone
- You can get to the top of KICC Nairobi for $2 http://www.mamamikes.com/bl... (Though I believe Times Tower is higher)
- r/t @highwayafrica09 Call for Nominations - SABC-Highway Africa New Media Awards. See http://highwayafrica.com
- R/T @LarryMadowo FYI Equity Bank H1 PBT down 15% on one-off transaction last yr related 2 Safaricom IPO, Q2 profits up 25%
- Blog job: write about blogging, social networking & social media from Asia, MidEast and African countries http://tinyurl.com/ljxmcp
- R/T @kachwanya TEAMs shareholders seem to be the confused - there is no onward connectivity between Europe and Dubai, where TEAMS ends!
- Kenya stockbrokers association (KASIB) launched investor education handbook today http://www.kasib.co.ke/
- So @kachwanya @kainvestor, Nairobi City Council earns 14sh ($0.2) for every flyer tossed out of a car window?
- R/T @alykhansatchu #Kenya new 234 item price basket will track mobile-#cellular and computers charges & #camel meat #inflation
- So many aviation colleges in Nairobi with unemployed graduates, these (striking)@kenyaairways workers should know this
- Spent 15min at Nakumatt queue while some afro-diplomats paid for groceries with us $. Their exchange rate is KES72 =$
- COTU's Francis Atwoli is going to brag about ending the #KQ strike, and coming through for workers.

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

Kutwa Tuesday: From Stanchart to LPG

stories found this week

Stanchart Bank:

Smaller profit - Standard Chartered is being much maligned for being the first bank to report a profit drop in 2008 of 4% to 4.7 billion shillings. ($59 million) (Increased 29% in 07). The bank which adopted a conservative approach compared to Barclays, KCB and Equity. Stanchart had asset growth of 9% to 99 billion (13% in 07), deposits up 4% to 77 billion and loans up 10% to 43 billion in 2008. Still their shareholders will get the highest dividend of any listed bank in 2008.

Here are some other performance comparisons of the main banks that have so far reported their 2008 results.

Goes for smaller customers - In a slight about turn, Stanchart has also launched a new low cost transactional account called Hifadhi, costs 2,000 to open, no ledger fees, or ‘cash handling fees’ with e-statements you only pay for transactions you incur, though its’ not as affordable as other 'cheap' bank accounts for small earners. Going for smaller customer has been a recurrent theme in 2008 with banks, insurance and investment companies lowering the minimum subscription amount. Examples are pepea from Barclays, Toboa from Old Mutual and even the Government of Kenya which lowered the minimum investment for GoK treasury bonds to just Kshs. 50,000 (~$625)

Bank briefs
- Stanchart get back to what they are good at – big corporate deals this one for Kengen
- Gulf African launches a shariah compliant mortgage scheme
- New bank branches: First Community bank now in Malindi, Ecobank in Kisii, while Family Bank re-opened in Githurai
- Another SMS sends Equity customers into bank panic withdrawals this time in Machakos.

From the blogs

Siasa mbaya, maisha mbaya: Global economic slump aside, Nairobi’s Stock Exchange will not see a bull run until the country’s political problems are sorted out according to MainaT

The Sunday Nation broke a story of the old Embakasi airport been handed over to an unlicensed new airline, but airport analysis comes from one Coldtusker

Following in the success of the infrastructure bond (over-subscribed by 45%), the Kenya Government is offering another bond to supplement its budget deficit; this one is for 8.5 billion ($106 million). More details from Conceptadvisoryservices and the minimum investment is just 50,000 ($625).

Kenya Rugby Effects: Kenya had a wonderful run at the IRB World Cup in Dubai, and knocked out defending champions Fiji in the quarter finals. Here’s some rugby loss reactionfrom Fiji.

Elsewhere

Employees lose & lose - it’s been a bad week for employees as the Employment Act was set aside and the government shifted more of the pension burden to civil servants to contribute towards their own retirement funds.

Madaraka finalized - Madaraka Estate houses were finally sold, apparently ending a long long running saga between homeowners, the City Council and the National Housing Corporation who should really update their website.

Laptop mania - so many offers for laptops these days, new this week were
- Safaricom selling Macbook with broadband modem for 100,000 ($1,250)
- Acer A110 laptop on sale with open office for $230 - great for Kenyans new to mini laptop market
- Even my bank/broker (CFC) hawks Acer Aspire 4710 and has loans that work out to 5,500 ($70) per month

Is Grad School a Con? - Half the Sunday Nation advertisements were for colleges aiming at the recent high school graduates whose results were announced last week. Also growing are the numbers of universities and master programs, but this article argues against going to grad school to avoid the recession with the author pointing out that;

- Grad school pointlessly delays adulthood.
- PhD programs are pyramid schemes
- Business school is not going to help 90% of the people who go.
- Most jobs are better than they seem: You can learn from any job.
- Graduate school forces you to overinvest: It’s too high risk.
(found at chris blattman)

LPG Shocker - when to buy cooking gas last night. Found the cylinder, however it appears that there is now a valve that will be mandatory on all cylinders from April 2009 - it is a universal valve, that will enable consumers to buy LPG /cooking gas from any supplier e.g. Kenol., Total, NOCK - replacing cylinders from any of them, since they will now have a common head/valve. The move is supposed to break the monopoly of established companies e.g. if you had a Kenol gas cylinder, you could only replace it at Kenol when buying new gas, whereas if you wanted to switch to Shell gas, you’d have to buy a brand new cylinder.


new gas cap

The problem was that many Total stations did not have the valve. (I checked at three stations) and they all sent me to the place that has everything in Kenya - Nakumatt. Nakumatt also say they stock valves for all companies, but only had the generic caps to sell. It’s scary to use a generic caps, since there are many fires in Kenya caused by exploding/leaking cooking gas cylinders. Hope this turns out ok when April comes around and more consumers realize they have to buy caps which cost anywhere from 500 ($6.25) to 900 shillings each, another cost to the burdened urban consumer. It would also be nice if oil companies and/or the Government conducted some consumer awareness about this matter, not leaving it to Nakumatt and untrained Petrol attendants.

Kenya 2007 Bank Ranking: Part II

Return on Assets pre-tax profits
Oriental 12.33%
StanChart 5.37%
Imperial 4.81%
Bank of India 4.58%
Barclays 4.48%
Then Equity (4.45%), I&M, NBK, Credit

Return on Equity
StanChart 53.23%
Bank of India 40.58%
Barclays 38.73%
CBA 38.71%
KCB 38.45%
Then Coop, Imperial, Stanbic, NBK, I&M

Loans to deposits ratio
DBK 153%
K-Rep 114%
Middle East 99%
Barclays 97%
NIC 90%
Then Housing Finance, Stanbic, Bank of Africa, Imperial, I&M

Ratio of government securities to customer loans Government-friendly
NBK 284%
Habib Bank 237%
Habib AG Zurich 188%
Bank of India 156%
Baroda 85%
Then City Finance, StanChart, Equity, Credit, DBK

NPA as % of Loans
City Finance 132%
Oriental 116%
Paramount Universal 82%
NBK 70%
EABS 67%
Then Consolidated, Guardian, Transnational, Housing Finance, Southern Credit

2007 Provisions to NPA ratio prudential banks
Stanbic 33%
I&M 30%
Giro 29%
Bank of India 22%
Diamond Trust 18%
Then CFC, Prime, ABC, K-Rep, Chase

Staff Expenses good employers?
Kenya Commercial 4,813 (4.8 billion shillings)
Barclays 4,562
StanChart 2,492
Coop 2,395
NBK 1,495
Then Equity, CBA, Citibank, NIC, CFC

Staff costs/assets even better (paying) employers?
K-Rep 6%
Consolidated 5%
Transnational 5%
KCB 4%
Family Finance 4%
Then Coop, NBK, Housing Finance, Imperial

(Non-interest)/commissions as a % of Total income charge you for breathing air in their branches
Oriental 87%
EABS 61%
Baroda 60%
Family Finance 53%
Equity 53%
Then Consolidated, Coop, Paramount Universal, Bank of Africa, KCB

Placements (short term cash in December 2007) to offer as IPO loans?
CBA 9.4 billion
Equity 6.9 billion
Stanbic 5 billion
NBK 3 .9 billion
Barclays 3.1 billion
Then Citibank, NIC, KCB, Imperial, Diamond Trust

Jan 18: From ODM to Icarus

three weeks after the ill-fated elections and three days of mass protests

The Disruptions in the work flow have been a nuisance to the country, while the violence is threatening to cut off Central Africa. But how long before President Yoweri Museveni decides to drive eastwards for another road trip eastwards to check out the situation for himself?

If ODM’s goal is to grind the country to a halt, it may take a while. With tax collections significantly down, the pending Safaricom IPO which I thought will be an election winner could turn out to be a (one time) budget lifesaver – expected to yield over 30 billion shillings in Q2 of 2008.

ODM is now specifically targeting companies linked to key government personalities like Citi Hoppa, Brookside and Equity Bank. This sounds far-fetched and could lead to retaliatory attacks (ODM personalities are also business people); it's also an extension of silent boycotts that people have undertaken on their own. E.g. people who only selling petrol to their kinsmen, while others boycott pubs or have stopped reading the Nation or Standard/KTN because of their perceived political leanings.

While George bush is trying to revive the US economy through bipartisan tax breaks, but here we have two sides who won’t even sit down with each other. If they don’t, the crisis may soon spin out of control as the race for the presidency assumes historical dimensions

cut & paste: The Central Bank has introduced business continuity guidelines for all banks. However, it seems to be an update of an IT disaster preparedness document that's a few years old, and does not mention any of the words - crowd, riot, security, cash, ATM – and only one mention of ‘police’. In short, it does not address many of the challenges banks have faced.

Insurers with hearts: Some insurance companies like pan Africa and Heritage (CFC) making exception on a case by case basis to assist business people victimized in the riots. As a rule, insurance companies have no responsibility to cover such acts

Such as Business coping: Ukwala supermarket, which was destroyed in Kisumu, lost all their financial records. They are asking suppliers & partners to provide them with statements, delivery reports, and invoices as at December 31 and not to bank any of their cheques.

But can’t please everyone: like thieves who take advantage of busy police battling rioters, some unscrupulous borrowers are also using the economic shutdown to plead with banks for delayed repayment and favorable revision of loan terms when the haven’t really been affected.

Signal of confidence: On Wednesday, Imara Holdings introduced a new fund targeting the Diaspora willing to invest in east Africa. It’s an open fund with minimum investment of 6.5 million shillings (~$100,000) and will be sold through Kenya’s ICEA

- Recognize us: Barclays have eaten humble pie for two years, but who would have through that high-street Standard Chartered would open a branch in Eastleigh?

Local Icarus: what happens when you fly too close to the sun

opportunities
- From PSD Blog; nominate a women entrepreneur to the doing business group of the World Bank.

Current open jobs
from the papers this week
- APA Insurance: unit managers, account managers. Apply to recruitement@apainsurance.com
- Safaricom: VAS Propositions Manager, Channel Development Manager, Key Accounts Executive – apply online. But for the position of chief information officer - but apply though pricewaterhousecoopers executive selection division (ESD).

Bank Review '07: Part IV

Finally the big leagues - these banks have large networks of branches and ATM’s in most of the major towns around the country.

6. (No. 13 last year) Equity Bank: Estimated assets of 51 billion ($730 million) and profit of 2.1 billion shillings ($30 million) as Equity continues the staggering 100% annual growth rate it has maintained since it converted from a building society. Took some political and banking industry heat, but was ably defended by authorities and management. The bank also bought out ¼ of Housing Finance and sold 25% a stake to Helios Capital to 11 billion shillings. The Helios deal will be used to finance Equity’s expansion into East & Central Africa as well as the payment to Housing Finance – and with the addition of new directors, Equity needs to sort out some governance and staff morale issues in the new year.

5. (9 and 10 respectivly) CFC Stanbic Bank: Estimated combined bank assets of 64 billion and profits of 2.2 billion resulting from the mega-merger of two mid-size banks – the local arm of Stanbic (Africa’s largest bank) and mid-size CFC with a combined corporate, insurance and stockbroking business. Some clash of cultures and systems can be expected as with most mergers, but this could be a South African - Kenyan partnership that succeeds, where many others have failed.

4. (4) Cooperative Bank: Estimated assets of 70 billion, profits of 2.5 billion in 2007. Another record year for the bank that has recovered massively from a loss five years ago and since the government set out to sort of the cooperatives sector debts. With growth of 15% from a year ago, and profit up 100%, though the MD was rumored to have been keen to move to KCB.

3. (3) Standard Chartered: Estimated assets of 100 billion and profits of 3.5 billion. The quietest of the big three banks in terms of product development & marketing, it lost ground to KCB even as it remains second in market cap. Hawking their products on street corners may have hurt their image, while the corporate banking is plagued by high fees and an operational system difficult to maneuver.

2. (2) KCB: Estimated assets of 110 billion and profits of 4.3 billion in 2007. Had a smooth CEO transition and growth of 20% but with both deposits and loans up 30% from a year ago. But into S. Sudan has been slow, while Uganda was also delayed, showing the difficult of regional banking.

1. (1) Barclays Kenya: Estimated assets of 160 billion ($2.3 billion), profits of 8.5 billion ($120 million) with growth of 25% from a year ago. The bank continued its turnaround, expanding in rural Kenya and other parts of Africa where it had previously withdrawn and closed branches. This is not the first time that it has had to reverse direction – years ago they spun off an unwanted asset finance business that is now NIC Bank – and who they are fighting for dominance of the same market.



who’s missing?
- Charterhouse Bank which is under statutory management by the Central Bank
- Gulf African – new Shariah bank began in 2007, but may be operating under different rules – (see post)
- Kenya Women’s Finance Trust a micro finance organization with assets of about 4 billion and profit of about 200 million that may be the next bank licensed in 2008.

Urgent need for Sub Cable

Whether it will be EASSy or TEAMS, the urgent need for East Africa to have a submarine cable will become apparent within a few years.

The 2006 merger of Intelsat and PanAmSat, creating the worlds' largest satellite provider, will have profound implications for Africa which is estimated to be 80% dependent on satellite communications. Higher costs can be expected from the giant company once existing agreements expire and ISP's will have no choice but to pass these own to consumers.

The government of Kenya broke away from other African countries (in EASSy) and has committed to the TEAMS project, budgeted at $100 million. It committed to pay $15 million this financial year and has contracted Standard Chartered bank to raise additional funding from ICT operators in the the private sector.

2006 Kenya banking review

still Barclays country

based on reported figures for September 2006

1. Barclays Bank of Kenya [assets worth 117.17 billion shillings ($1.67 billion)] In 2006 Barclays made a major policy about turn and announced expansion plans including reopening branches they had closed a few years ago. They also venture into Shariah compliant banking as did KCB, I&M, Dubai and K-Rep banks.

Compared to September 2005, assets were up 10%, deposits 12%, loans 14% but income was up only 6%. They also increased their investment in government securities to about 40% of the loan book. Still despite being Kenya’s largest bank, it also has the 2nd highest return on assets at 4.16% (second only to Equity Bank at 4.74%)Barclays shareholders had a very happy year, which saw them earn a bonus share and a share split in addition to their usual top dividend.

2. Kenya Commercial Bank [84.92 billion] KCB nudged passed Stanchart in assets while its share price zoomed passed though Stanchart still has a higher market cap and better returns. KCB’s expansive rural branch network was the envy of other banks such as Barclays and it also expanded into Sudan in 2006. KCB’s assets were up 18%, deposits 17%, loan 13% while income was up 26% from a year ago

3. Standard Chartered [84.09 billion] The bank launched several new products including accounts aimed as women (Diva) and children and adult savings (Safari) accounts. Stanchart also appointed a new MD – Mr. Etemesi. Assets up 18% deposits 16% loan s22% and income 10% while it also increased its investment in government securities

4. Cooperative Bank [55.17 billion] Co-op’s strong recovery continued and it remains a strong candidate for a listing in the next two years. One of their unique traditional products - kids’ savings accounts – was invaded by other banks this year. Compared to last September, assets were up 12%, deposits up 18%, income up 19%, but loans down by 16%. Also their total non performing assets (NPA’s) doubled to 17 billion while the bank also tripled its in investment in government securities during the year.

5. National Bank of Kenya [39.37 billion] NBK is yet to have its capital and debt restructuring done even though it is promised every year by the Government and despite reporting profits each quarter, it was not able to pay any dividends. The Bank launched a low fee (Taifa) account to counter the crowds flocking to Equity and Co-op banks. Assets and loan were up 10%, deposits and income up 16% and it tripled investment in government securities but NPA have also doubled to from a year ago.

6. Citibank Kenya [35.43 billion] Assets up 12% loans up 42% and income up 33%. Was a late entrant to the share craze providing advisory services to the Mumias rights issue in November.

7. Commercial Bank of Africa [35.12 billion] CBA opened a new headquarters and is expected to venture into stockbroking. Assets, deposits, loans, and income were all up 21% but NPA also up 45% from a year ago.

8. CFC [25.04 billion] Had a successful rights issue to raise capital and also continued to roll out new insurance products. Its stockbroking unit is the largest in the country and was reported to have processed Eveready applications amounts that exceeded the shares being offered. CFC doubled its investment in government securities, assets were up 35%, deposits and loans up 20%, income up 61% but NPA were also up by 74% from the year before.

9. NIC [23.55] Still the leader in asset finance while their flat fee (MOVE) was imitated by other banks. Assets and deposits were up 18%, loans 15%, and income 33%, but NPA’s doubled from a year ago also. Shareholders finally enjoyed some significant price appreciation after being stuck at 50 /= forever.

10. Standard Bank (Stanbic) [23.29 billion] Many Kenyans bought shares in their Ugandan subsidiary while the Bank has expressed an interest in investing in NBK once it is restructured. Stanbic which has the lowest NPA (followed by Citibank and D-Trust) had assets up 54% deposits and loans up 44% and income was up 49%.

11 Investment & Mortgages [21.79 billion] I&M had assets up 25% deposits 27% loans 36% and income up 33% as the bank made a push into the credit card sector.

12 Diamond Trust [19.14 billion] Raised capital in an over-subscribed rights issue in December and is rumored to consolidate with a sister bank next year. Assets were up 27% deposits 29% loans 25% while income was up 33% from a year ago.

13 Equity [16.33 billion] Kenya’s s fastest growing bank had assets up 63% deposits 81% loans 105% and income 90% however expenses in Q3 grew faster than income and NPA’s are up 165%. It has the highest returns (assets 5% and equity 46%) and successfully listed all their shares on the NSE in 2006

14 Bank of Baroda [11.43 billion] Assets and deposits up 29%, loans up 27%, income up 22% and profit could double this year.

15 Housing Finance [9.8 billion] Has a new MD while its share price appreciated beyond expectation leaving it with the highest P/E on the NSE. Assets, deposits, loans, income, and expenses remained basically unchanged from a year ago while the bank has converted cash into government securities. The lack of new loan growth resulted in NPA’s forming a greater portion (72%) of loan book.

16 Prime Bank [9.26 billion] Assets and income up 40%, deposits 43% loan 29% and profits are up 69% from a year ago.

17 EABS Bank [8.55 billion] Teething pains continue as assets shrunk by 4% but with a positive outlook as income increased twice as fast as operating expenses this year, but still NPA’s are at 72%.

18 Imperial [8.47 billion] Assets up 5% loan 146% and securities up 60% as the bank had redeployed about 1 billion in placements. Income is up 13% and Imperial has among the top 5 returns (even better than Citibank)

19 Bank of India [8.15 billion] Assets and deposits up 20%, loans up 56%, income up 46% but NPA up 43% - still the bank is on track for a huge profit this year.

20 Bank of Africa [6.23 billion] Expects to open another Nairobi branch and but into a bank in Uganda to go with the one it invested into in Tanzania. Assets up 17% deposits 35% loans 16% and income up 31% and despite increase expansion costs remains on track to achieve a profit this year.

21 Fina [6.15 billion] One of the banks that has championed SME financing and also has an extensive operation in Rwanda. Assets unchanged from a year ago while loans up 17% profits will be 41% higher, but NPA also up 59%.

22 Habib AG Zurich [5.07 billion] Asset up 9%, loans 16% and income up 11% at this bank which invests primarily in government securities.

23 ABC [4.95 billion] Assets up 7% with loans up 4%, and income up 20% from a year ago however NPA’s also up 46%.

24 Giro [4.93 billion] Nothing much heard from partnership with SBI (India) and
Assets were up 3%, income up 9%, but loans down 13% and profit will be less than 2005.

25 Guardian [4.66 billion] Assets up 2%, and bank has upped its investment in government securities by 61% compared to 2% growth in loans – however NPA up 216% .

26 K-Rep [4.52 billion] One of the banks that pioneered the micro-finance sector now finds itself being crowded out by new entrants advertising all manner of SME packages. It will administer an ADB guaranteed line of credit for women entrepreneurs (along with CFC and CBA). Assets up 31,% deposits 59& and income up 50% proving that micro finance is low risk niche with only 4% NPA’s even as loans by K-Rep increased by 40%.

28 Southern Credit [4.27 billion] Assets up 1% deposits up 6% and loans 9% but with NPA’s up 52% from a year ago at the bank with a major credit card arm.

29 Victoria [4.19 billion] Assets and deposits up 8% and the bank has reduced its NPA’s by 49% and now has the lowest NPA in the country at 1% with 1 billion shilling in the bank.

30 Charterhouse [3.94 billion] The bank was placed under statutory management following money laundering and tax evasion allegations and has fought back through the courts and the press (& with some questionable tactics). Even as depositors are locked out, assets up 19% but profits down 33% and the CBK manager increased investments in government securities - up by 332% (as directed by the law)

31 Equatorial [3.67 billion] A Sameer bank had assets up 1% but reduced government securities by 72% to increase loans by 22% but NPA also up 75%.

32 Middle East [3.45 billion] Assets up 1%, loans up 45%, but deposits down 10% yet bank may increase its profit as a result of an improved NPA positions.

33 Consolidated [3.45 billion] Assets up 29%, deposits & loans up 33% and despite high NPA it may achieve a profit in 2006. The Deposit protection fund is expected to sell its 50% stake in the bank, but without a profitable track record it will remain private.

34 Chase [3.29 billion] Assets up 33%, deposit 53%, loans & income up 43% but NPA also up 42%.

35 Development Bank of Kenya [3.05 billion] Assets up 20%, deposits & loans are up 50% but NPA up 52%.

36 Habib Bank [3.02 billion] Assets, deposit, and loans, all up 4% this year at Habib which is rumored to consolidate with sister bank in 2007. Has the highest ratio of investment in government securities.

37 Credit [2.77 billion] Assets down 6% and NPA up 125% as the bank drops 3 places in rankings.

38 Transnational [2.44 billion] Assets up 12%, while deposits & loans up 20% from a year ago but NPA also up 73%.

39 Fidelity [2.11 billion] Income up 50% while deposits & loans both up 35% from a year ago.

40 Paramount Universal [2.05 billion] Assets up 55%, deposits up 72% but income is flat and NPA's are significantly up.

41 Oriental (formerly Delphis) [1.37 billion] Losses continue to eat into assets. Growth in income finally faster than growth in expenses but not enough to reverse wipe out of gains in the 1st half of the year as the bank moves further away from profitability and drops behind Paramount in size.

42 Dubai [1.22 billion] One of the first banks to recognize the potential of having a branch in the Eastleigh area now finds itself fighting with new entrants (giants Barclays and KCB) invading the area. Assets up 5%, loans up 12%, deposits up 15%, but NPA up 130% from a year ago.

43 City Finance [0.53 billion] Smallest bank with deposits up 34% (to 130 million), but income down 31% and NPA up 40% from a year ago.

Other institutions
Would be ranked 27 - Family Finance [4.47 billion in assets] Almost as fast growing as Equity with a similarly ambitious expansion plan, but was not able to become a bank since their planned conversion was put on hold by Central Bank. A share capital share of 390 million is more than other existing banks, but new banks are expected to be stronger and so the society went for a controversial private placement which was under-subscribed in November 2006. Assets and profits are up 40% from a year ago while deposits are up 50%.

new bank - Gulf African Will be the first 100% Shariah bank in Kenya

Bank Briefs

Barclays has sweetened its’ mortgage terms

Consolidated: The deposit protection fund (DPF) will sell it’s 50% stake in Consolidated Bank back to the government –who are likely to hold on to the stake until the Bank has a profitable streak that will enable a public listing (e.g. Kenya Re) in a few years. The DPF, which guarantees funds of Kenyan bank account holders (up to 100,000 shillings), is now only allowed to invest in government securities.

Equity: As usual, is the first bank to report their September results and Kenya's fastest growing bank has doubled in almost all measures since a year ago. With assets up 42% and profits up 54% (already exceeded 2005’s) the bank is on track to reach the 1 billion shillings in pre-tax profit mark – a feat the established Nation media group only achieved this year. (See other Bank rankings)

HFCK now offers 20 year mortgage plans.

KCB has four buildings up for sale this month: Hamburg house (Tom Mboya St) for 60 million shillings, Lakhani place (Moi Ave.) 40m, Diamond Building (Moi Ave.) 30m and Loncom Building (Kenyatta Ave - Nakuru) also for 30m. deadline 10 November.

Safaricom: Is this the future of money transfers and micro finance?. Safaricom will roll out M-pesa in 2007 which was developed with CBA and Faulu Kenya. Some rough numbers from the trials: Average transaction (1,000 shilling or $14), 0.6 transactions per day, average cash deposit and transfers - 1,500 ($20), and average transfers and withdrawals were 300 shillings each.

Stanchart
- Has a new CEO: Richard Etemesi replaces Mike Hart
- To get new software: CR2's BankWorld integrated channel banking solution (source: Factiva)

Stanchart goes I-banking in Africa

Standard Chartered PLC will buy 25% of First Africa Group later this year. (AFX)

Standard Chartered AGM

The Bank held it's 2006 AGM at KICC today.

Prox-crush
The line for proxies was longer, and served slower, than that of shareholders causing me to miss half the meeting. In fact, I was turned away when my name was not on the proxy list. As I walked away I remembered something and went to another attendant who found my name on his list - it appears different officers had different lists of proxies!

New chairman
Today marked the retirement of Hannington Awori as Chairman and long serving director of the Bank. He was replaced by Mr. David Njoroge the, well regarded, former auditor general of Kenya. (Wrongly listed at government site as still current)

Shareholder questions
They were not many questions as two shareholders who feature at most AGM’s, and recently at the Nation’s, took up quite a bit of time with endless comments and praise for the Chairman and performance the Bank.

Others:
- Why no women directors?
- Can we have bonus share to mark Chairman's retirement?
- Why doesn’t bank tailor personal loans for retirees, not just employed people?
- Why no provision for a 250 million shilling judgement the Bank lost in the courts?

Hot button issue
The Bank’s CEO had earlier concluded his long speech on the Bank’s year with a video featuring blind runner Henry Wanyoike, a world paralympics champion - which has now being converted into an advertisement (with a Kenyan theme) that the Bank is showing in 54 countries as a model of partnership.

There had also been mention of the corporate social responsibility activites of the bank through support of projects totalling 40 million shillings to various community partnerships during the year such as a new 6.5 million shilling bus for the Thika School for the Blind.

Some shareholders were upset about this and, during question time, wanted to know why the bank was spending their money on programs instead of more dividends. Another asked for the bank board to present a budget for such activities before embarking on them without consulting shareholders first. As others lined up for lunch they questioned if 40m was actually spent on projects (Kenyans mistrust and believe there is corruption beneath even good ventures).

Goodies
Handed out after the meeting was a tote bag with t-shirt and lunch box from inter-continental hotel (sprite can, burger, samosas, apple, drumstick, spring roll). And in a few weeks, a 3.1 shilling per share dividend.

Good and simple banking technology

good use
Pesa Point’s new ATM’s continue to multiply as they are quickly installed in unexpected places. An ATM is such a useful banking facility that it is shocking how many people still patronize banks that don’t have them. One problem with ATM’s thought is their high initial cost, which can range from 2 to 4 million shillings and their need for secure wall/building locations. But Pesa Point seem to have worked out that problem by coming up with light weight, stand-alone, low cost machines which can be easily be set up. Here are a few more places that Pesa Point should set up machines to cope with our economy in which hard cash is still the currency of choice:

(1) inside bars & clubs e.g. Choices or K2 so you don’t have to drive off (drunk) at 2.a.m to withdraw more cash
(2) all court houses (to facilitate speedy bail payments)
(3) all police stations (to facilitate midnight bail payments)
(4) Ngong race course, casino’s and other gambling spots
(5) at ‘safe’ sports event venues e.g. Safari Sevens grounds (but not soccer stadiums)

simple technology
Standard Chartered Bank is renowned for its investment in technology to improve customer service – e.g. they were early pioneers of ATM’s and are still the only bank at whose ATM’s you can pay your electricity bill. But there’s one simple machine they need to re-adopt - cash counting machines.

I spent half hour while an adequately staffed group of hard-working tellers took an inordinately long time to count out wads of cash, unwrapping and counting out with their fingers, dozens of thousand-shilling notes at a time – one lady even counted about a million shillings, by my estimate.

It's the of the month for most companies (who close for a two week x-mas break) and many customers were withdrawing huge amounts of cash (that probably exceed ATM daily limits). A Cash counter is old fashioned and costs about 100,000 shillings but the savings they generate are so much more to the other customers who are waiting for their turn. When used by bank tellers, they are able to serve customers at a much faster pace. Maybe there are high incidents of fraud that some banks have ordered their tellers to thumb and count each note by hand, but the use of cash counters would have saved so much time wasted at the Bank this morning.

Flat fee Banking

Flat fee bank accounts are the closest thing to free-checking accounts here. NIC was teh first with MOVE (launched in November 2003) and since then other Bank's have tried to imitate the MOVE concept whose main feature was an offer of a variety of bank transactions - all for a flat monthly fee. A comparison of the offers in order of rank;

1.Diamond Trust Open Plan:(490/= shillings per month)
Diamond Trust Open Plan includes ATM card, one chequebook each year inward salary processing, unlimited deposits & withdrawals from ATM and quarterly statement internal transfers. The Bank also has Open Air: (For 690/=) which comes with spouse ATM card, free internet banking, 2 cheque books a year, and monthly statement) and Open Sky: (For 790/=) which offers one a a designated relationship manager, 3 cheque books a year, 1 free bankers cheque per month and unlimited standing orders inclusive of loan instalments to other banks. DTB currently has 11 ATM locations (9 in Nairobi).

2. NIC Move (800/= month)
MOVE includes a free ATM Card, 50-leaf cheque book, incoming salary transfers, monthly Standing orders & direct debits, one free Bankers' cheque per month, internet banking, monthly statement, SMS Banking and MOVE Zone Locations have loan/account representatives and self-help PC available from 8 a.m. to 8 p.m. MOVE has 13 (11 in Nairobi) ATM locations.

3. Standard Chartered All-in-One (750/= per month)
Stanchart includes ATM card, cheque books, standing orders, local/foreign telegraphic transfer, travellers cheques, local ATM withdrawals, free foreign currency purchase/sale, free DEBIT card and one free bankers cheque per month. Has the largest ATM network (58) out of the four banks.

4. CFC (Saturday only)
CFC Bank has some transactions free on Saturdays only including: interim statements, chequebooks, banker’s cheques/drafts, and traveller’s cheques. (All are subject to minimum balance of 10,000 maintained throughout the month, otherwise a fee of Kshs.500 per month)

Super director

Hannington Awori, chairman of both Nation Media Group and Standard Chartered Bank on the same day (May 26th)
He has attained age 70, mandatory age for retirement at Stanchart; he was re-elected and will remain as Chairman for one more year, while he and the Board groom a successor (a move Barclays Kenya also made last year).

In banking this week

Citibank (31.5b assets) Roars Back
After a lacklustre 2004, Citibank Kenya has already surpassed its 2004 profit in the first three months of 2005. Deposits increased by 23%, from 19.5 billion shillings to 24b, and the bank net interest income and total operating income of 263m and 501m respectively, between January and March 2005. As a result Citibank earned 308 m before tax, and 185m after tax (compared to 124m for the entire 2004 year)

Diop: Kibaki tenant
As has been already pointed out, it is a conflict of interest for World Bank Country Director (or the World Bank itself) to be a tenant of the President of Kenya. In Equatorial Guinea, where President Obiang has been accused of fleecing the country, one favoured channel of corruption was that oil companies would always rent buildings and properties from Obiang and his family (even a 12 year old kid) at exorbitant rates.

Know your credit history
In a Kenya Gazette notice this week, the Banking Act has been amended so that a bank customer is now entitled to know any information a credit bureau holds on him, by requesting this in writing. This will enable the customer to correct information, file a complaint with the Bank and encourage the bank to investigate the dispute for correction. (Applies to all banks and financial institutions)

Executive changes
Mukhisa Kituyi has appointed James Ochami as the new managing director of Industrial Development Bank Ltd. He also appointed Evans Kisina as a director.

Stanchart to target mid-sized businesses
Standard Chartered Bank has launched a Small and Medium Enterprises (SME) division. The SME product will offer a combination of overdrafts, letters of credit, bonds and guarantees, credit bill negotiation, invoice discounting among other benefits. The bank has also introduced trade and working capital, finance products, auto loans, commercial and residential mortgage facilities to cater for different customer needs.

New robbery technique
Bank robbers are now posing as customers in banking halls as they scope out people making huge withdrawals. They then rob them far away from the Bank, often posing as police officers.

Union wrong footed on Labour Day
The Bank union which earlier forbade its members from participating in a performance appraisal system at Kenya Commercial Bank, are now crying foul – and now opposing payment of bonuses to management and other members of staff who were evaluated and found to be high-performers in the process.

Mortgage 2005

The 2005 Homes Expo was held at Sarit Centre over the weekend. Various financial institutions were represented at the fair all offering various mortgage products. While HFCK and Savings & Loan (KCB) have been in the mortgage business for years, low interest rates beginning in 2003 caused Barclays, Standard Chartered and other banks to enter this market.
Others mortgage players not represented at the fair include: Credit Unions, East Africa Building Society (about to merge with Akiba Bank), Commercial Bank of Africa, I&M Bank and NIC Bank.

Some general facts
- For comparison purposes, I used a typical 6 million shilling ($75,000) property such as a 3 bedroom flat in Kilimani or a 4 bedroom maisonette in South C
- The longer the mortgage period, the higher the interest rate
- While most loans are variable rates, recently some banks have introduced fixed-rate mortgages
- Banks finance less (i.e. higher down payment) if you don’t live in the property
- Banks finance less for properties out of major towns (or not at all)

Barclays
Barclays will finance up to 85%, loan repayable over 15 years at a variable rate of 12.5%. You can use the facility to build new home, transfer your current mortgage, or borrow against your property (an equity release) to meet other financial obligations.

To buy your 6 million home, your down payment is 900,000 ($11,250) and Barclays will finance 5.1 million ($63,750). Annual repayments on the 5.1 million will range from 445,000 ($5,600) in year 1 and reduce to 62,000 ($775) in year 15.

Housing Finance Company of Kenya (HFCK)
Has a 3-plan mortgage scheme;
(1) Startup Plan mortgage: 10 to 15 year mortgage designed for 1st time borrowers
(2) House Plan mortgage: 5 to 10 year mortgage – for those who want to repay mortgage faster e.g. are closer to retirement
(3) Ace Plan mortgage: less than 5 years for those who have higher disposable incomes or are making investments

You can use HFCK loans for owner-occupied (you live there), investment residential (you don’t live there) equity release, construction loans & residential plots (maximum of 2 years for development to begin) purposes. Generally they finance up to 80% if you live there, 70% if you don’t.
- Interest rate is what gets some HFCK borrower into trouble. Their current base rate is 13.75 p.a. and in the StartUp Plan (for the 6 million shilling house) you pay Base +4% p.a. If you prove to be a good with your repayments, you get a discount of 1% p.a., but if you fall behind on repayments, you arrears attract an interest rate of base +5%.
- Closing costs are at least 5% of market value (including 4% stamp duty, 1% commitment fee, and other fees)
- Your 6 million house for 1st time borrowers falls into the Start up mortgage and after a down payment of 1.2 million ($15,000), HFCK will finance 4.8 million ($60,000)

KCB through their subsidiary “Savings & Loan Kenya Ltd.”
- Loans are charged 12.5% for up to 15 years for residential house or flats, and 12% for estate development.
- They finance up to 80% of property in Nairobi, Mombasa, Kisumu, Nakuru and Thika and only 70% if it is a property you’re not living in or are located in another town (i.e. you increase your down payment from 20% to 30%)
- Their loans are available to any borrower with repayment ability, but for salaried people the loan maximum is such that repayments must not exceed more than 2/3 of your net monthly salary
- Typical fees include: appraisal fee (1%), ledger fees 350 shillings/month, legal fees, stamp duty (4%), registration fee (0.2%)
- Typical repayment: To buy your 6 million shilling house, your down payment is 1.2 million ($15,000) and KCB will finance the remaining 80% (4.8 million $60,000). Repayment in year 1 will be about 450,000 (5,625) in year 1, and reduce to 70,000 ($875) in year 15

Standard Chartered
With Stanchart, you can build new home, transfer your current mortgage or borrow against your property (an equity release) to meet other financial obligations and the Bank says that loans are approved within 48 hours.
- This is at a fixed interest rate for up to 10 years is 14.5%, up to 15 years is 15.5%, and they finance up to 85% of property financed i.e. you put 15% down payment
- To buy your 6 million home, down payment is 900,000 ($11,250) and Stanchart will finance 5.1 million ($63,750) – and over the 15 years, repayments on the 5.1 million loan will be 72,000 per month.
- They also have a variable rate mortgage, which will result in monthly repayments of about 68,000 per month over 15 years to but your 6 million shilling home.

Profit drop at Standard Chartered

In 2004, Standard Chartered posted a 1.8 billion shilling profit, down 33% from 2.8 billion in 2003. Much was blamed on the low interest rates and during year, the bank transferred much of its lending away from the government and toward the public. Loans to the public increased from 19 to 27 billion shillings, while government securities held by Stanchart fell from 32 to 24 billion. Commission and fee income reduced by 166 million, while other income also dropped by 700 million. Unlike Barclays, which reduced its staff costs by 40%, Stanchart staff costs increased by 8% to 1.6 billion.

The Bank closed the year with deposits of 57 billion, and even though earnings and dividends have reduced from 2003, shareholders will still be happy with a 6.50 per share dividend (on earnings of 6.74 per share) as their share prices have almost dipped to their 12 month low of 130 shillings.