Group profit before tax - 3.64 billion 2009,3.5 billion 2008
Group profit after tax - 2.41 billion 2009,2.458 billion 2008

Not that big of a difference. Okay results especially after expansion blitz.

@maina t

wat does f&c stand for?

Mv ufanisi- Tx.

Got the pdf. Main driver of the flat numbers is Safaricom IPO in '08 i.e. not there this yr. If you take that out,I'd say the numbers are not too bad...

The number you gave for loan loss provision is the balance sheet which is while relevant probably doesn't give the full story. LLP in the P&L only increased by 350k.

www.mjengakenya.blogspot.com

How much of the business made actually turned into profit...hence share holder value...??...how much profit was generated for each shilling of assets they got?...how much r we losing as share holders to outstandin debt?...compare all the above to similar period last two years...r we packing in value or hemorraging shareholder values... Hizo story zingine ni details.

..if it is not expressly prohibited in law.. DO IT!!!!

@Kausha - your post doesnt make sense.... KCB = KQ because of 2 quarters in a tough year? Provisioning is definitely good practice - at least they are not burrying their heads in the sand. Cannot vouch for market value of Triton Collateral? - could that be why they provisioned? Expansion looks like pri,marily targting transactions.... waiting to see if you post can shed more light on your thoughts.

KCB only broke even,has not yet reported a loss.

Status changed from Buy to Hold



AFRICAN INVESTOR

Vvs I don't understand what you mean by higher operating profits! this is a bank,only earnings count here,were it a manufacturing concern you would be spot on. My thesis is this if you strip out KCB kenya and S&L from the group,you will notice things are not too rosy. First,as i highlighted earlier,banks increase footprint to generate deposits,increase transaction volumes and protect client market share. My major contention,is other than Sudan and arguably the branch in Rwanda,i believe KCB is onto a serious goof in TZ and UG. Also ramping up branch network to 156 in Kenya when the likes of Equity and BBK are shutting or contemplating while NIC is scaling down plans is rather reckless.

Strip out KCB Bank Kenya at half year,you will realize there is only 18.5B loan book,if remove S&L on conservative quarter 1 extrapolation you end up with about 4B worth of loans for Sudan,TZ,Uganda and Rwanda together. On deposits strip out Kenya Bank you end up with 11.4B then chuck S&L you end up with less than 1B deposits..either S&L has dropped deposit levels or Sudan has onlend to Kenya massively otherwise there is a big gap in deposits. On shareholder funds,the rest of the businesses only have 873.8m in shareholder funds,most of this belong to S&L I believe and a bit to Sudan,there is definately capital trouble in uganda and Tanzania. KCB is also struggling for liquidity,notice the 6.2B owing to CBK,KCB kenya never borrows from CBK,they bank government in most instances,why the shortfall. Haya KCB's deposit profile is 70% transaction and the rest savings and fixed. Their loan to deposit ratio is at 81.2%,optimally they operate at 60% coz you need a bit more liquidity to support the operations. Martin will also tell you they need up for 40% liquidity for comfortable operations otherwise it becomes filling air to a punctured tyre on a journey; you will still have to stop and repair the gadamn tyre ask BBK

Haya onto the P&L,Strip out the bank and S&L net incomes and you end up with 226m for the rest of the operations. On the expenses bit,strip out KCB and S&L and the rest of the group is about 850m. The loss for the rest of the group is about 500- 600m. Now unless I am wrong,this expansion story looks like is a P&R bubble,you must get deposits or transactions income none of which grew in the half. I will dig deeper into the Kenyan expansion latter and see whether it had a rationale. Where does this leave us,KCB can't lend much so earnings will slow or most probably decline in the second half and next year . remember they lent 30B last year and that's why the interest income has grown that well,however you notice this growth got consumed by the fad called expansion. So if there is no growth in loans this year but costs of the regional expansion will still be growing meaning less earnings. Also danger of this kind of expansion is that they are burning capital and either they will stop taking deposits coz of weak statutory ratios or come again for new funds/ debt or with hold dividends,picture this from a company not growing earnings and you understand why i am begining to loose sleep on this investment. A core capital to deposit ratio of 12.8% with half year earnings,you have to pray that provisions dont go up although they look like they will from the movements in the bad book. They took 5B last year,what have they got to show for it??? regional presence i suppose.The return on new invested capital (RONIC) on the 5B is an absolute disaster! very negative which suggests alarm bells should start ringing in the not so distant future. In my mind KCB should have opened an office in Rwanda,acquired in uganda and increased throughput in kenya post temenos 24. They went the other way.

I will look at the details further... BUT the higher Operating Profits excludes 'recoveries'... i.e. KCB made significant recoveries (or claimed they did) in 1Q+2Q 2008. The recoveries might be considered 'not usual' coz of the reasons they were written off in the first place...

Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB

RONIC is different from Return on Equity,it's one of the key measures for expansion. If your project's RONIC is higher than ROE,you invest otherwise you stay put or you risk throwing away shareholder funds by investing in salaries and rents for no return. That recoveries story is management bubble gum! Offcourse the recoveries are previous years' provisions and therefore a moot point. Strip that section out and see what you get. I suspect they sold Mugoya complex which they had provided for previously. What they dont tell you is that out of the colorful lending they did in 2008 (30B) their interest income grew by aprox 2B,however this was wasted through additional costs of 1.3B and additional interest expense of 400m incurred to support poor deposit perfomance of new branches i believe. Presuming they didnt open new branches,they would have saved at least half of that 1.3B and incurred the 400m to pay for additional depositsanyway,bottomom line would have been 15% better at the very least....now what happens when the lending in those new branches doesnt kick off and provisions increase when the external auditor shows up which looks very likely????

Wanted to buy some KCB shares for medium to long term,what price would be optimum given the results and future outlook.