@Kenyaninvestor, its true. It was an incentive put up to attract more companies to list thus comparing KCB & EB on PBT is better off than PAT. What i'm not yet sure about is if the rate EB was using ended in the last financial period or will end during this financial period as i'm not sure whether a co. starts to use the rate on the financial period in the year of listing or the next.

The reasons why KCB might never overtake Equity:

1.KCB is too conservative and rigid they take alot of time to respond to market needs and when they do it takes alot of time to take off take for instance mobile banking Iam sure we have KCB customers who dont even know its linked to MPESA.Agency banking they partners with posta which to me does not add any value since if you look at postas outlet distribution its the same as KCB and he working hrs are slightly the same.

2.KCB has never shed its elitist tag even when their strategy to target SME takes shape.I have dealt with both KCB and Equity and their management styles are totally different whereas Equity will mingle freely with its customers even visiting customer premises and homes to have a clear understanding of their loan applicants KCB rely solely with the audited accounts and bank account history...which to me makes them disconnect with their target customers.

3.KCB has one of the slowest service in the country it takes several minutes to serve a single client am sure if KCB had the same number of customers as Equity service will come to a stand still...I think they need to work on their customer turn around time.

@young, I wouldn't be so bold as to predict that KCB will perform better than Equity from 2012. As, @VituVingiSana says, Equity will also be growing.

You say you bought KCB at an equivalent price of 5.1/=. Excellent for you! But for those who are starting to invest now, would you still advise them to pick KCB over Equity?

Getting the Cost:Income ratio to 50% might take more than the 18 months you state, even if we consider the 1 billion rise in staff costs to be a one off

@gmg Replicating agency banking in other countries will depend on their regulatory framework.

Here in Kenya,Equity agency banking is spreading like bush fire, actually I think it posses a serious threat to safaricom Mpesa network.

Funny KCB has not registered any price movement while supply outstrip demand the market was not impressed by the results or The bear is lurking.

Agency banking will be replicated every where coz Kenya sets the pace for other countries in East Africa. to know the impact of EQUITY Agency visit the coutry side

@Kenyainvestor,

If I am to choose btw KCB and member, I will go for KCB but at a lower price cira 20bob

(i) The Equity biz model on SME from my point of view is not sustainable on the long term. It will rise NPL profile because unfortunately SMEs tend to have a high failure rate. I understabd equity gives loans to buy matatus and taxi cabs !

(2) On regional expansion to grow profits KCB is well ahead, the regional branches have turned from loss, break even position to profitability. Be aware that regional expansion is always at a cost. My Nigerian Bank UBA return losses in Uganda and Kenya, that does not mean it will not be profitable. Ecobank that is now a success had a similar experience. I do not think Equity will be different.

However I do not have any plan in my life time to buy either KCB or Equity shares. With 39,500 units in KCB and 10,000 units of Equity I am sitting on as my holder in your NSE I am okay with that. This returned a handsome dividend of Ksh51,000.

Please do not be suprised about 39,500 holdings it is because of 10 for 1 split in 2006.
I only got 2600 units it it balooned to 26,000 units.

I did not even participate in the last KCB rights as I rather picked some KPLC.

@Kenyainvestor,

If I am to choose btw KCB and member, I will go for KCB but at a lower price cira 20bob

(i) The Equity biz model on SME from my point of view is not sustainable on the long term. It will consistently NPL profile because unfortunately SMEs tend to have a high failure rate. I understand equity gives loans to buy matatus and taxi cabs !

(2) On regional expansion to grow profits KCB is well ahead, the regional branches have turned from loss, break even position to profitability. Be aware that regional expansion is always at a cost. My Nigerian Bank UBA return losses in Uganda and Kenya, that does not mean it will not be profitable. Ecobank that is now a success had a similar experience. I do not think Equity will be different.

However I do not have any plan in my life time to buy either KCB or Equity shares. With 39,500 units in KCB and 10,000 units of Equity I am sitting on as part of my holding in your NSE I am okay with that. This returned a handsome dividend of Ksh 51,000 out of ksh 243,000 dividend income realised to date in 2011.
Mind you I started small and consistently from 2004.

Please do not be suprised about 39,500 holdings it is because of 10 for 1 split in 2006.
I only got 2600 units then it balooned to 26,000 units.

I did not even participate in the last KCB rights as I rather picked some KPLC to avoid
over exposure to banking stocks, because as I role I do not intent to hold more than 20% of my portfolio in the financial sector.

Call it my 2 cents no problem. Bear in mind that I am a non resident investor and income (high dividend yield stocks) is my principal investment objective in NSE

@young, I am aware that investing for dividends is your game

he explained why here:
http://www.wazua.co.ke/f...spx?g=posts&t=10101

For the Subs to make 300M profit in H1, they 1st pulled out of a 1.2B loss over H1 2010. Thus, in essence the KCB subs made 1.5B.