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KCB results not so impressive:
Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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guru267 wrote:lest all the doubting thomases be warned... this company has HUGE growth waiting for it Unfortunately that's all keep we hearing about KCB. Huge potential mpaka siku gani?
BBI will solve it :)
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Rank: Veteran Joined: 5/31/2008 Posts: 1,076
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For me KCB is becoming something of a let down. Has Martin Odour run out of ideas? Less than a month ago, the advice on this stock was,- buy buy buy. Where does this leave those who heeded that call. Dunia ni msongamano..
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Rank: Member Joined: 12/20/2006 Posts: 5
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I have always had an issue with KCB's expansion strategy:
KCB has gone in the old fasion way of acquiring land and putting up building blocks hence the near nil results from foreign branches.
consider the competitors:
1. Equity adopted the acquisition way in Uganda
2. NIC Bank Acquired in Tanzania;
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Rank: Member Joined: 2/1/2007 Posts: 112 Location: Nairobi
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Their 2010 overheads will be significantly reduced when they are done with the 1000+ retrenchment process. However, why is it that they get into loan agreements with companies like KPCU. KPCU has been mismanaged for ages and so has been Panpaper. They should also train their staff on customer care because some of them behave like government workers. It's amazing what you can achieve when you get rid of fear.
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Rank: New-farer Joined: 1/10/2010 Posts: 73 Location: kenya
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@vitus - You say Bbk to consolidate UG and TZ to benefit the local kenyan investor.
Even as it is, what percentage of BarclaysKenya do Kenyans or local investors own? Does it even reach a quarter?
Barclays Kenyan entity is the most profitable in Africa;
Why would we merge ours with UG and TZ?
Wont that just Increase the retained earnings from profits earned in our market to help bring the two to our level of profitability and you know what that does to the dividend?
As much as they are independent the operations are already merged under ABSA, its only that our entity is more efficient.
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Rank: New-farer Joined: 1/10/2010 Posts: 73 Location: kenya
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I think KCB is trying to do every thing that is necessary all at the same time.
From adopting new technology, to regional expansion, to downsizing, to recovering non performing corporate loans all at the same time is exhausting.
I think with good infrastructure in technology everything else will fall into place.
But I also thought that when they said the money raised from the rights was to be used for regional expansion it meant returns were not to be expected that soon?
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Rank: Chief Joined: 1/3/2007 Posts: 18,120 Location: Nairobi
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Audi wrote:I have always had an issue with KCB's expansion strategy:
KCB has gone in the old fasion way of acquiring land and putting up building blocks hence the near nil results from foreign branches.
consider the competitors:
1. Equity adopted the acquisition way in Uganda
2. NIC Bank Acquired in Tanzania;
Someone has to put the branches. Either you can build your house or buy from a developer... I think KCB decided to build the house pole pole... Hopefully, the cost of building their brand/branches is cheaper than acquisitions... BTW, Equity also built up the business from scratch in S.Sudan coz no banks to buy there. Unless it can buy a bank on the cheap, it will have to do the same in Rwanda. As Kenyan (& Nigerian + South African) banks become regional, the 'sellers' in Rwanda, Tanzania, etc are asking for higher prices. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Veteran Joined: 7/8/2008 Posts: 947
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chaliwong wrote:I think KCB is trying to do every thing that is necessary all at the same time.
From adopting new technology, to regional expansion, to downsizing, to recovering non performing corporate loans all at the same time is exhausting.
All you stated above is just chewing and walking. They just have to do it! The problem is when they have two opposing policies running concurrently.
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Rank: Chief Joined: 1/3/2007 Posts: 18,120 Location: Nairobi
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tony stark wrote:chaliwong wrote:I think KCB is trying to do every thing that is necessary all at the same time.
From adopting new technology, to regional expansion, to downsizing, to recovering non performing corporate loans all at the same time is exhausting. All you stated above is just chewing and walking. They just have to do it! The problem is when they have two opposing policies running concurrently. You have to multi-task... look at banks who lagged on adopting cheaper money transfer... Equity jumped on the bandwagon early with Eaazy & M-Pesa & is now reaping the benefits... also the HUGE number of ATMs made Equity far more flexible vs others... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 10/13/2009 Posts: 1,950 Location: in kenya
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This company has problem with the NPL if you factor the loses it incurred from triton alone then panper and uchumi its even a miracle it did not post a loss. Another thing is its services,I have an account with them and the number of times I have walked out because of slow service is just numerous and its not I alone but several other friends of mine .You will be three of you in a queue but you will stand there for more than 30min.b4 you are served. '......to the acknowledgment of the mystery of God, and of the Father, and of Christ; 3 In whom are hid all the treasures of wisdom and knowledge.' Colossians 2:2-3
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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From what the MD said the 15 billion is meant to raise KCB's ability to take in more deposits and advance higher amounts to single borrowers. The focus going forward is likely to be big projects and big accounts plus with the staff cuts it's not going to be the bank for small savers.
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Rank: Member Joined: 1/9/2008 Posts: 537
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hmmm...bbks wage bill is 1.2 bn higher than kcb's...the ceo mentioned nothing about staff morale...morale in kcb is a big issue..ever been at theyr branches? u get better service at the post office! how do managment expect any change in performance when the investment in human resources is static???? what part of MOTIVATION dont kenyan businesses understand???theyr plan to raise 15bn is big fat joke....kcb already has inxs of 20bn in capital...wtf do they need a further 15?to further invest in loss makin subsidiaries? today im selling my final holdings in this counter( all of 300 shares)...i have ZERO faith that KCB will do anytg spectacular anytime soon...
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Rank: Chief Joined: 1/3/2007 Posts: 18,120 Location: Nairobi
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@selah - KCB still suffers from the 'civil service' mentality. It needs to up the game or Equity & Co-op will eat their lunch! Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 10/1/2009 Posts: 2,436
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Audi wrote:I have always had an issue with KCB's expansion strategy:
KCB has gone in the old fasion way of acquiring land and putting up building blocks hence the near nil results from foreign branches...
You have a point here. The era of expanding corporates investing in brick and mortar for their branches is long gone. We are in the era of outsourcing and leasing (EABL is a good case study, does both very successfully). How much capital would a bank need to put up say 20 branches if it has to put up the buildings itself? Tons of it! And even the time frame - it will take the bank eons to do so if it has to search for land, get land, complete legal formalities including the shenanigans at the lands offices, & put up the buildings itself! Yet a bank can lease a building, renovate it into a branch with KShs 25m within 6 months. Building detracts a co. from its core business. Because after you put up all those branches, you will need a unit to maintain them,lease them as well as the attendant rent issues with tenants,etc. That means more overheads in form of salaries, admin costs,etc. Inevitably those issues will find their way to the Board rooms and detract the Co. from its core job of making money. What expanding banks are doing is lease a building for a period of at least 5-10 yrs; many are the cases (Barclays, DTB, Co-op) where a customer approaches a bank for finance in putting up a building and the bank seizes the opportunity to do so as well as become the customers anchor tenant or so. If I recall correctly this is ONE of the factors that ailed Uchumi with its numerous plots/ buildings all over the country and crucial management time was expended in resolving the issues arising at the expense of the Co.s' core job - running the chain.
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Rank: Veteran Joined: 9/4/2009 Posts: 700 Location: Nairobi
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I’m quite impressed with KCB and Equity's performance and loan book growth compared to Barclays’s top-line growth over the past two years. The fact is Equity and KCB have recognized the human cost and is replacing them with technology…they've seen the high expansion costs and downsizing…but what’s important is top-line growth. I got a friend to send me the q-o-q changes in Barclays net loan book. Qtr : Net Loan Book (% Growth) Q4 ’07 : 105,436 mn (12%) Q1 ’08 : 101,313 mn (-4%) Q2 ’08 : 106,691 mn (5%) Q3 ’08 : 106,658 mn (0%) Q4 ’08 : 108,086 mn (1%) Q1 ’09 : 101,313 mn (-7%) Q2 ’09 : 98,390 mn (-3%) Q3 ’09 : 96,268 mn (-2%) Q4 ’09 : 93,543 mn (-3%) The highlights of their performance: negative/zero loan book growth for 6 of the past 9 qtrs…high liquidity risk in 2008…4 straight quarters of negative growth in 2009 with MD saying that repayments were rising faster than new loans (that's what every bank tries to tackle)…high interest rate risk on massive govt securities portfolio if cbk suddenly changes its policy…but they see no problem with this as their loan provision gain by a 60% reduction…bank lending in ’09 was not reserve constrained in as CBK juiced up the market with liquidity Barclays MD claimed issues with maturity mismatch between bank assets and liabilities…short term window, CBR, being irrelevant; banks not having adequate long term funds to fund longer term projects…but Barclays has been one of the few banks that has been able to source long term funds…they got 3.078 bn from fixed and floating rate medium term notes in late 2007 and early 2008 then an additional 1.251 bn in late 2008 in the form of 10 year loan capital issued by Barclays Bank Plc (subordinated debt) to enhance its capital base. This bank is just full of excuses, for not loaning to the private sector. I wonder just how much the local management is responsible for and how much of this performance can be attributed to their Absa overlords? “We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
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Rank: Chief Joined: 1/3/2007 Posts: 18,120 Location: Nairobi
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@intelligentsia - On Uchumi, the mismanagement & scams was the primary factor! They went from a no (longterm) debt to horrendous long-term debt situation... The original MO was smart. 'Use' suppliers credit terms to sell off goods... and re-invest all 'extra' cash into new branches or safe (high return) treasuries. Then came chris 'thieving' kirubi who never saw a golden goose he didnt want to slaughter... The 'old' Uchumi's best store was the Sarit Centre branch. They opened on Sundays & was always packed... Of course, parking & traffic was not a problem it is now! And the MD was very smart... he used to 'use' the then free on weekends/holidays Sunken Car Park (Aga Khan Walk) to get folks into the otherwise 'dead' store in the CBD. He did the same with the Jamia/Market (now Tuskys) store by using the Parking Lot behind it. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: New-farer Joined: 2/4/2010 Posts: 16
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Why are you guys so much on the case of KCB?However, what I still do not understand why the need of the additional 15b when they had a rights issue recently?
Is it a case of blatant inefficiency and the obviously below average customer service hidden by beautiful adverts all over?
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Rank: Veteran Joined: 11/30/2006 Posts: 635
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2012 wrote:guru267 wrote:lest all the doubting thomases be warned... this company has HUGE growth waiting for it Unfortunately that's all keep we hearing about KCB. Huge potential mpaka siku gani? I cant agree more.Since 2006 when they raised capital in a rights issue, we have been told year in year out KCB are the leaders of banking in future. Mpaka siku gani? Reminds me of the political slogan 'vijana ni vionozi wa kesho' I also have an issue with their IT framework. These guys have been implementing a 'new' IT system since time memorial. Mara Temenos, mara huku . I recall last year when their ATMs dished cash indiscriminately without recording the withdrawal in the customers accounts. I wonder how much they lost.
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Rank: Chief Joined: 1/3/2007 Posts: 18,120 Location: Nairobi
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@scubidu - Barclays Kenya not related to ABSA (except thru Barclays PLC)... ABSA has no say or shares in BBK... BTW, if CBK/GoK does reduce interest rates (seems like it is doing so)... the value of Treasuries will bump up BUT I agree... where is the growth in the loan book? On the other hand... BBK & SCBK could look at larger deals as infrastructure in Kenya expands: - KPLC & KETRACO (New transmission lines from Ethiopia-Central) - KPC (pipeline not oil stocks!) KShs 10-15bn - Toll roads - KP Refinery (which needs $500mn!) - Mumias (water plant, ethanol plant, Tana Delta) - KAA/JKIA expansion Lower margins vs personal loans but less drama (human resources)... I might be a sceptic of Barclays' lending policies BUT you cant argue with their CONSISTENT success over the past 20 years! Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 1/3/2007 Posts: 18,120 Location: Nairobi
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chaliwong wrote:@vitus - You say Bbk to consolidate UG and TZ to benefit the local kenyan investor.
Even as it is, what percentage of BarclaysKenya do Kenyans or local investors own? Does it even reach a quarter?
Barclays Kenyan entity is the most profitable in Africa;
Why would we merge ours with UG and TZ?
Wont that just Increase the retained earnings from profits earned in our market to help bring the two to our level of profitability and you know what that does to the dividend?
As much as they are independent the operations are already merged under ABSA, its only that our entity is more efficient. Shareholders (small or large) benefit from higher profits... It is IRRELEVANT as to what percentage 'Kenyan' investors (1 share or 99.99%) own in Barclays... I can only invest what I have! If I have more cash, I can buy more shares coz plenty of sellers... The relevant point (which I had not addressed) was what PRICE would/should BBK pay to acquire BBU or BBT. That is critical. Does the ROI from buying BBT/BBU higher than BBK's ROI? When TPS (aka Serena Kenya) acquired "Serena Tanzania" properties... the question was... Was it arms length? Did TPS (which became TPSEA post-merger) benefit? [BTW, thanks to the merger... TPSEA lucked out in 2008 coz they directed business to Tanzania]. As for benefits to BBK... well, ultimately... the region needs to integrate (even the ever recalcitrant Tanzanians know this) & cross-ownership (normally) helps... BTW... for Barclays PLC... East Africa is one unit! Adan heads Kenya, Uganda, Tz & Ghana! Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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KCB results not so impressive:
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