Equity Still Rocks Despite Controversy

Enviable feats:Against a backdrop of controversy sorrounding the shareholding of its Chief Executive, the company has realize such enviable feats in recent times that the players in the banking sector are yearning for.

Being Kenya’s largest retail bank, Equity, has posted an impressive growth that put its ahead of most companies in the banking league.

Growth: The company recorded a 107% growth in pretax profits to Sh1 billion for the half-year period ended June 30.

Operating Income: This increased by 83% to Sh2.6 billion from Sh1.4 billion in a similar period last year.

Customer Base: Its customer base rose by 300,000 in the 6 months since January to 1.3 million customers representing about 35 per cent of all bank accounts held in the 42 licensed banks in the country.

Customer deposits: This went up by Sh7.3 billion to Sh23.6 billion since January.

After Tax profit: The bank’s after tax profits increased by 137 per cent to Sh830 million up from Sh350 million in a similar period last year.

Interest Income: Net interest income for the period was Sh1.2 billion compared to a total non-interest income of Sh1.3 billion.

Overhead expenses: This increased by 70% from Sh903 million to Sh1.5 billion as the bank forged ahead with its branch and staff expansion.
Total assets: This went up by Sh9 billion to Sh29 billion.

Staff numbers: It grew by 600 to 1,919 in the period.

Awards: The bank recently won the global vision award in microfinance jointly with Grameen Bank of Bangladesh, during the annual G8 summit held last month in Germany.

Shares: The bank’s shares continued to maintain its stability and liquidity with sizeable investors still streaming in to buy a piece of the companies stake. This is after the shares fell to an all time low of around Ksh 80 just after the effecting of a bonus issue. However this was only shortlived as the the shares were priced at between Sh133 and Sh128 in yesterday’s trading at the stock market.

Housing Finance stake: The company has already signed a deal to buy 24% of the the stake in Housing Finance, the listed mortgage company, after successful boardroom negotiations with CDC to take up its shareholding in the company once the impending rights isue is effected.

Financial Supermarket: With the company in partnership with Britak in the Housing Finance deal, it appears theat the company might be headed towards the establishment of a financial supermarket with British American Insurance, British American Asset Managers, Dyer and Blair, Housing Finance and Equity Bank in the deal to provide a one stop shop for insurance, Capital markets Investments, Corporate Finance, Asset management, retail lending , mortgages etc

NBK out of the Woods at Last!

No longer at the edge

The results released yersterday by the National Bank of Kenya board/management show that the company has reported a 35% increase in pre-tax profit to Sh617 million for the half year ended June 30, a proof that the repayment of a Sh2o billion debt by the Government is bearing fruits and has helped to pull the company from the edge.

Bonds issued

The debt repayment by the government was effected after it issued bonds worth Sh20 billion as a repayment of Government guaranteed debts advanced by the bank to state corporations. The government has further promised to pay the remaining Sh1 billion by March next year thus clearing its bad debt portfolio with the bank and hopefully enabling the company to significantly reduce its bad debts provision which had significantly reduced its profitability margins over the years.
It was evident that the bank’s investments in government securities shot up by a whooping 743 % from Sh2.8 billion to Sh23.6 billion (The 20B increase in the balance sheet) reflects the loans that were converted into government bonds.

National Bank of Kenya has reported an after tax profit of Ksh.432million compared to Ksh.320 million during the same period last year. This translates into an increase of 35% over the same period last year.

The company's financials summary is as presented below:
1.Interest income on loans & advances:
This reduced from Ksh.2.3billion to Ksh.1.8billion.

2.Interest expense:

This reduced from Ksh.439million to Ksh.375million due to the general decline in interest rates.
3.Provision for bad & doubtful debts:

This reduced from Ksh.1billion to Ksh.350million marking the end of the bank‘s provisioning for all historical bad debts.

4.Commission income:

This improved from Ksh.600million to Ksh.725million.

5.Total deposits:

Deposits increased from Ksh.27billion to Ksh.33billion.
6.Gross Non Performing Loan’s portfolio:

The level not fully provided for and therefore to be managed in NBK balance sheet is Ksh.5.5billion against which a total provision of Ksh.4.3billion is held leaving a net of Ksh.1.2billion. This is covered three times over by securities hence the zero exposure shown.Fully provided for NPL’s which therefore cannot negatively affect operations are being managed by the bank separately outside its balance sheet.
7. Core capital:

This stands at Ksh.3.6billion against the current statutory requirement Ksh.250million and the extended limit of Ksh.1billion. Following the restructuring of the GOK debt (20billion) and full provision of NPL’s, the asset quality of the bank as measured against the core capital has improved significantly.

New Branches:

New branches to be opened are at Moi’s Bridge and at Egerton University.

ATM network:

This continues to expand after the partnership with PESAPOINT last year that saw NBK customers access an additional 110 ATMs. The bank will soon double the existing ATMs in the branch network.
Asset Financing:
The bank recently introduced asset finance and unsecured business loans to meet the changing needs of our customers. Our existing products are currently being reviewed and repackaged with a view to making them up to date with the market dynamics and the ever evolving customer needs.
Mortgage Financing:

The company is working on a mortgage product which is set to be launched soon. The bank will continue to introduce new products that provide solutions to the financial needs of our customers and Kenyans in general.

From the foregoing, the bank is likely to have come out of the woods at last...