Wazua
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I&M - FY 2017
Rank: Chief Joined: 1/3/2007 Posts: 18,120 Location: Nairobi
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2016 was in "interesting" year for banks. We saw the collapse of 3 banks. Dubai Bank was expected. Chase and Imperial were not expected by most depositors or even the CBK. That hurt a lot of small-medium banks as a crisis of confidence took place. The "Interest Cap" Act took the KBA by surprise. It was a political move and not well thought out but here we are. Many banks from the huge KCB to the deft Equity to the teeny weeny niche banks took a hit. I don't think there is a listed bank that didn't pay the price in its share price. Some more than others. I admit I&M, like many banks, is going through a rough patch with the interest caps, rapidly growing GoK debt, corruption at the Lands Office (& GoK) and economic malaise. Compared to 2015 for 2016 I expect, - A higher level of NPLs - Lower 4Q PAT (post interest cap) - Similar PAT but probably lower for FY 2017 - A reduction drop in Loans Advanced - More % of T-Bonds and T-Bills - Lower forex profits [CBK has cracked down on dealers] In 2017, I don't expect much improvement in the fundamentals. It will be a year of consolidation. Clean up the books/NPLs, reduce lending in favor of safer Gov't securities. So I look (optimistically) towards 2018 [assuming no PEV] - The interest rate cap/band to be loosened/widened [from 4% to 5%] - Fewer new NPLs [coz of less lending in 2017] - GoK starts printing money and paying off contractors = loan repayments - Speedier resolution [including arbitration] of cases under Maraga - Prudent (but slower) lending thanks to new/tougher CBK regs I am a fundamental(ist). Not TA. Not insider info. A fan of Warren Buffett. I will change my mind as needed. I am not married to any stock. So will I bail out at 78/- today? No, unless there's bad, bad news [not "code"]. I think the price has adjusted downwards as the above info got factored (baked) in. It may go below 78/- but I am not a trader and the cost of transacting (sell then buy) is quite high on the NSE. I expect the results in mid-March as usual. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 6/15/2013 Posts: 301
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what price did you get in if you don't mind sharing?
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Rank: Chief Joined: 1/3/2007 Posts: 18,120 Location: Nairobi
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Talking of 2018 - One of the reasons why banks will start taking on less risky loans in 2017. For many banks, including I&M, 2017 will be about trying to regularize and restructure NPLs rather than lending to less-than-AA customers. http://www.businessdaily...00696-h1purwz/index.htmlGreedy 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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mulla wrote:what price did you get in if you don't mind sharing? I buy over time so there's not a single price. Some were converted from City Trust. In other words, I do not know. That said, I always look at the CURRENT price. It matters not what one has bought them at. I learnt that with KQ. I sold them around 13-14 in 2012 regardless of my cost. I feel 78 is a fair (even cheap) price at the moment given what I know. I await the 4Q 2016 and Annual Report for FY 2016 especially the NPLs among other disclosures. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 10/26/2015 Posts: 151
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[quote=VituVingiSana]Talking of 2018 - One of the reasons why banks will start taking on less risky loans in 2017. For many banks, including I&M, 2017 will be about trying to regularize and restructure NPLs rather than lending to less-than-AA customers. http://www.businessdaily...0696-h1purwz/index.html[/quote] Should we expect banking stocks to take a hit again in Q1 2017? Still not really sure as the interest cap had already stimulated banks to give out "safer" loans. However, there'll be an invariable increase in LLPs, negatively impacting the bottomline. With this state of limbo, CFC and DTB seem to the safest bets. CFC due to its high non-interest income, DTB due to the good quality of its loan portfolio.
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Rank: Chief Joined: 1/3/2007 Posts: 18,120 Location: Nairobi
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MadDoc wrote:VituVingiSana wrote:Talking of 2018 - One of the reasons why banks will start taking on less risky loans in 2017. For many banks, including I&M, 2017 will be about trying to regularize and restructure NPLs rather than lending to less-than-AA customers. http://www.businessdaily...0696-h1purwz/index.html Should we expect banking stocks to take a hit again in Q1 2017? Still not really sure as the interest cap had already stimulated banks to give out "safer" loans. However, there'll be an invariable increase in LLPs, negatively impacting the bottomline. With this state of limbo, CFC and DTB seem to the safest bets. CFC due to its high non-interest income, DTB due to the good quality of its loan portfolio. When you ask "a hit" are you referring to price action or profits? Price action - No idea Profits - Yes, I expect 1Q 2017 < 1Q 2016 but the "price" has adjusted downwards for in anticipation of lower FY 2017 profits. Some banks esp the mid-tiers [DTB, NIC, I&M] don't have an incentive (premium) to lend to riskier borrowers so they have 2 options: Find "good" borrowers and/or Gov't Paper. Why lend to @VVS vs GoK/EABL/BAT when @VVS can die, go broke, lose his house/plot/shamba to a land-grabber, lose his job? [All this for CBR+4%] EABL, despite its issues, is a cash cow and has enviable assets. BAT is an uber cash cow. GoK can always print/tax its way out of debt. It's better to end to GoK at 12.5% tax-free IFB than lend to @VVS at 14%. I think the growth in NPLs will moderate in 2017 but the LLPs will be required. NPLs are balance sheet items. LLPs are P&L items. Over time the NPLs convert to LLPs. CFC - They didn't have significant number of "high rate" loans like Equity but South Sudan needs to be written off. DTB - I like them but I think they need to increase their NPLs esp for their clients who borrow to build. NIC - They took very high NPLs in 2015. In 2016, they were trying to manage their NPLs i.e. collections. They may have a write-back. LLPs may be another story as the NPLs move to LLPs. I&M - I think the reported NPLs will increase. The entry of CDC will force them to toe the line re: NPLs. I expect LLPs to increase in 2017. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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good thoughts wazua chief. Sometimes I have to rub my eyes when I see price of DTB and I&M. Still picking up Dtb bei ya jioni The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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VituVingiSana wrote:MadDoc wrote:VituVingiSana wrote:Talking of 2018 - One of the reasons why banks will start taking on less risky loans in 2017. For many banks, including I&M, 2017 will be about trying to regularize and restructure NPLs rather than lending to less-than-AA customers. http://www.businessdaily...0696-h1purwz/index.html Should we expect banking stocks to take a hit again in Q1 2017? Still not really sure as the interest cap had already stimulated banks to give out "safer" loans. However, there'll be an invariable increase in LLPs, negatively impacting the bottomline. With this state of limbo, CFC and DTB seem to the safest bets. CFC due to its high non-interest income, DTB due to the good quality of its loan portfolio. When you ask "a hit" are you referring to price action or profits? Price action - No idea Profits - Yes, I expect 1Q 2017 < 1Q 2016 but the "price" has adjusted downwards for in anticipation of lower FY 2017 profits. Some banks esp the mid-tiers [DTB, NIC, I&M] don't have an incentive (premium) to lend to riskier borrowers so they have 2 options: Find "good" borrowers and/or Gov't Paper. Why lend to @VVS vs GoK/EABL/BAT when @VVS can die, go broke, lose his house/plot/shamba to a land-grabber, lose his job? [All this for CBR+4%] EABL, despite its issues, is a cash cow and has enviable assets. BAT is an uber cash cow. GoK can always print/tax its way out of debt. It's better to end to GoK at 12.5% tax-free IFB than lend to @VVS at 14%. I think the growth in NPLs will moderate in 2017 but the LLPs will be required. NPLs are balance sheet items. LLPs are P&L items. Over time the NPLs convert to LLPs. CFC - They didn't have significant number of "high rate" loans like Equity but South Sudan needs to be written off. DTB - I like them but I think they need to increase their NPLs esp for their clients who borrow to build. NIC - They took very high NPLs in 2015. In 2016, they were trying to manage their NPLs i.e. collections. They may have a write-back. LLPs may be another story as the NPLs move to LLPs. I&M - I think the reported NPLs will increase. The entry of CDC will force them to toe the line re: NPLs. I expect LLPs to increase in 2017. I lost you. saidia Pesa Nane plans to be shilingi when he grows up.
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Rank: Chief Joined: 1/3/2007 Posts: 18,120 Location: Nairobi
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Pesa Nane wrote:VituVingiSana wrote:MadDoc wrote:VituVingiSana wrote:Talking of 2018 - One of the reasons why banks will start taking on less risky loans in 2017. For many banks, including I&M, 2017 will be about trying to regularize and restructure NPLs rather than lending to less-than-AA customers. http://www.businessdaily...0696-h1purwz/index.html Should we expect banking stocks to take a hit again in Q1 2017? Still not really sure as the interest cap had already stimulated banks to give out "safer" loans. However, there'll be an invariable increase in LLPs, negatively impacting the bottomline. With this state of limbo, CFC and DTB seem to the safest bets. CFC due to its high non-interest income, DTB due to the good quality of its loan portfolio. When you ask "a hit" are you referring to price action or profits? Price action - No idea Profits - Yes, I expect 1Q 2017 < 1Q 2016 but the "price" has adjusted downwards for in anticipation of lower FY 2017 profits. Some banks esp the mid-tiers [DTB, NIC, I&M] don't have an incentive (premium) to lend to riskier borrowers so they have 2 options: Find "good" borrowers and/or Gov't Paper. Why lend to @VVS vs GoK/EABL/BAT when @VVS can die, go broke, lose his house/plot/shamba to a land-grabber, lose his job? [All this for CBR+4%] EABL, despite its issues, is a cash cow and has enviable assets. BAT is an uber cash cow. GoK can always print/tax its way out of debt. It's better to end to GoK at 12.5% tax-free IFB than lend to @VVS at 14%. I think the growth in NPLs will moderate in 2017 but the LLPs will be required. NPLs are balance sheet items. LLPs are P&L items. Over time the NPLs convert to LLPs. CFC - They didn't have significant number of "high rate" loans like Equity but South Sudan needs to be written off. DTB - I like them but I think they need to increase their NPLs esp for their clients who borrow to build. NIC - They took very high NPLs in 2015. In 2016, they were trying to manage their NPLs i.e. collections. They may have a write-back. LLPs may be another story as the NPLs move to LLPs. I&M - I think the reported NPLs will increase. The entry of CDC will force them to toe the line re: NPLs. I expect LLPs to increase in 2017. I lost you. saidia I believe DTB needs to look more critically at loans given to property developers and under current market conditions provide for more potential bad loans by increasing what they report as NPLs. Be conservative. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 10/26/2015 Posts: 151
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VituVingiSana wrote:MadDoc wrote:VituVingiSana wrote:Talking of 2018 - One of the reasons why banks will start taking on less risky loans in 2017. For many banks, including I&M, 2017 will be about trying to regularize and restructure NPLs rather than lending to less-than-AA customers. http://www.businessdaily...0696-h1purwz/index.html Should we expect banking stocks to take a hit again in Q1 2017? Still not really sure as the interest cap had already stimulated banks to give out "safer" loans. However, there'll be an invariable increase in LLPs, negatively impacting the bottomline. With this state of limbo, CFC and DTB seem to the safest bets. CFC due to its high non-interest income, DTB due to the good quality of its loan portfolio. When you ask "a hit" are you referring to price action or profits? Price action - No idea Profits - Yes, I expect 1Q 2017 < 1Q 2016 but the "price" has adjusted downwards for in anticipation of lower FY 2017 profits. Some banks esp the mid-tiers [DTB, NIC, I&M] don't have an incentive (premium) to lend to riskier borrowers so they have 2 options: Find "good" borrowers and/or Gov't Paper. Why lend to @VVS vs GoK/EABL/BAT when @VVS can die, go broke, lose his house/plot/shamba to a land-grabber, lose his job? [All this for CBR+4%] EABL, despite its issues, is a cash cow and has enviable assets. BAT is an uber cash cow. GoK can always print/tax its way out of debt. It's better to end to GoK at 12.5% tax-free IFB than lend to @VVS at 14%. I think the growth in NPLs will moderate in 2017 but the LLPs will be required. NPLs are balance sheet items. LLPs are P&L items. Over time the NPLs convert to LLPs. CFC - They didn't have significant number of "high rate" loans like Equity but South Sudan needs to be written off. DTB - I like them but I think they need to increase their NPLs esp for their clients who borrow to build. NIC - They took very high NPLs in 2015. In 2016, they were trying to manage their NPLs i.e. collections. They may have a write-back. LLPs may be another story as the NPLs move to LLPs. I&M - I think the reported NPLs will increase. The entry of CDC will force them to toe the line re: NPLs. I expect LLPs to increase in 2017. I did not understand what the article meant by the prediction of non-performing loans. Its been the norm to use non-payment over 3 months as the baseline. Are there really other structures in place to predict if a loan will go bad?
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Rank: Chief Joined: 1/3/2007 Posts: 18,120 Location: Nairobi
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MadDoc wrote:VituVingiSana wrote:MadDoc wrote:VituVingiSana wrote:Talking of 2018 - One of the reasons why banks will start taking on less risky loans in 2017. For many banks, including I&M, 2017 will be about trying to regularize and restructure NPLs rather than lending to less-than-AA customers. http://www.businessdaily...0696-h1purwz/index.html Should we expect banking stocks to take a hit again in Q1 2017? Still not really sure as the interest cap had already stimulated banks to give out "safer" loans. However, there'll be an invariable increase in LLPs, negatively impacting the bottomline. With this state of limbo, CFC and DTB seem to the safest bets. CFC due to its high non-interest income, DTB due to the good quality of its loan portfolio. When you ask "a hit" are you referring to price action or profits? Price action - No idea Profits - Yes, I expect 1Q 2017 < 1Q 2016 but the "price" has adjusted downwards for in anticipation of lower FY 2017 profits. Some banks esp the mid-tiers [DTB, NIC, I&M] don't have an incentive (premium) to lend to riskier borrowers so they have 2 options: Find "good" borrowers and/or Gov't Paper. Why lend to @VVS vs GoK/EABL/BAT when @VVS can die, go broke, lose his house/plot/shamba to a land-grabber, lose his job? [All this for CBR+4%] EABL, despite its issues, is a cash cow and has enviable assets. BAT is an uber cash cow. GoK can always print/tax its way out of debt. It's better to end to GoK at 12.5% tax-free IFB than lend to @VVS at 14%. I think the growth in NPLs will moderate in 2017 but the LLPs will be required. NPLs are balance sheet items. LLPs are P&L items. Over time the NPLs convert to LLPs. CFC - They didn't have significant number of "high rate" loans like Equity but South Sudan needs to be written off. DTB - I like them but I think they need to increase their NPLs esp for their clients who borrow to build. NIC - They took very high NPLs in 2015. In 2016, they were trying to manage their NPLs i.e. collections. They may have a write-back. LLPs may be another story as the NPLs move to LLPs. I&M - I think the reported NPLs will increase. The entry of CDC will force them to toe the line re: NPLs. I expect LLPs to increase in 2017. I did not understand what the article meant by the prediction of non-performing loans. Its been the norm to use non-payment over 3 months as the baseline. Are there really other structures in place to predict if a loan will go bad? There may be new/innovative analytical tools which may do that. There's no guarantee that banks can predict what will go wrong and when. The IFRS is trying to push banks to be more prudent while lending. It's about probabilities and analysis of Big Data. I think Equity will do well seeing how they have invested in a massive data center & analytical capabilities to support Equitel's loan platform. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 12/4/2009 Posts: 10,702 Location: NAIROBI
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Rwanda to sell 20% stake in I&M bank Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 6/23/2009 Posts: 13,547 Location: nairobi
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Ericsson wrote:Rwanda to sell 20% stake in I&M bank And we all know why
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Chief Joined: 1/3/2007 Posts: 18,120 Location: Nairobi
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obiero wrote:Ericsson wrote:Rwanda to sell 20% stake in I&M bank And we all know why Why?  Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 12/4/2009 Posts: 10,702 Location: NAIROBI
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The Rwandan government plans next week to sell its 20% stake in I&M bank operations in Rwanda with the aim of raising $14.1mn The IPO would be launched on Feb 14 and the proceeds would be used to help finance a new airport at Bugesera Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Member Joined: 12/1/2007 Posts: 539 Location: Nakuru
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obiero wrote:Ericsson wrote:Rwanda to sell 20% stake in I&M bank And we all know why Why? Forgive my ignorance For investors as a whole, returns decrease as motion increases ~ WB
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Rank: Chief Joined: 1/3/2007 Posts: 18,120 Location: Nairobi
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Ericsson wrote:The Rwandan government plans next week to sell its 20% stake in I&M bank operations in Rwanda with the aim of raising $14.1mn
The IPO would be launched on Feb 14 and the proceeds would be used to help finance a new airport at Bugesera Poor chap can't get over the fact that I&M makes a profit while KQ can't pay its creditors. GoR is reducing its stake/s in private firms and wants to encourage listings on the RSE. I think it would have been better to sell the 20% to I&M Holdings in exchange for I&M Holdings shares. GoR could have listed/sold those to its citizens and have a cross-listing. For I&M Rwanda, the direct listing may give it good publicity. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 6/23/2009 Posts: 13,547 Location: nairobi
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VituVingiSana wrote:Ericsson wrote:The Rwandan government plans next week to sell its 20% stake in I&M bank operations in Rwanda with the aim of raising $14.1mn
The IPO would be launched on Feb 14 and the proceeds would be used to help finance a new airport at Bugesera Poor chap can't get over the fact that I&M makes a profit while KQ can't pay its creditors. GoR is reducing its stake/s in private firms and wants to encourage listings on the RSE. I think it would have been better to sell the 20% to I&M Holdings in exchange for I&M Holdings shares. GoR could have listed/sold those to its citizens and have a cross-listing. For I&M Rwanda, the direct listing may give it good publicity. Now at KES 74.50.. We await KES 65 which is the fair price for the share
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Ericsson wrote:The Rwandan government plans next week to sell its 20% stake in I&M bank operations in Rwanda with the aim of raising $14.1mn
The IPO would be launched on Feb 14 and the proceeds would be used to help finance a new airport at Bugesera Premature sale IMO. My friend Kihara Maina brings valuable experience from Barclays TZ to I&M. Expect exponential growth going forward. Bugesera airport is a political project, situated deep inside Tutsi land. An airport at Ruhengeri makes more economic sense, offering access to Congo and the Virunga. Life is short. Live passionately.
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Rank: Elder Joined: 6/23/2009 Posts: 13,547 Location: nairobi
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sparkly wrote:Ericsson wrote:The Rwandan government plans next week to sell its 20% stake in I&M bank operations in Rwanda with the aim of raising $14.1mn
The IPO would be launched on Feb 14 and the proceeds would be used to help finance a new airport at Bugesera Premature sale IMO. My friend Kihara Maina brings valuable experience from Barclays TZ to I&M. Expect exponential growth going forward. Bugesera airport is a political project, situated deep inside Tutsi land. An airport at Ruhengeri makes more economic sense, offering access to Congo and the Virunga. No respectable Kenyan will buy this IPO.. Why trade on a cross listing while the holding group is right here
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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