KCB dividend payout in FY2019 to be maintained at the level of 2018

Circular on the proposed NBK acquisition

This will help in lowering costs.

Interim dividend book closure is on Thursday 5th September 2019

https://kenyanwallstreet...e-land-to-settle-debts/

East African Portland Cement Company seeks to sell part of its idle land to raise working capital pending approval of an extraordinary general meeting to be held on September 27, 2019.

Board chairman in a memo asked the shareholders to consider disposing of two parcels 745 acres and 1329.95 acres in the Mavoko sub-county in Machakos.

The sale he says will enable the troubled firm to clear all loan obligations, raise funds of operational, and plant refurbishment.

However, the EAPCC will need to evict squatters before declaring the land ready for sale. Part of the cash raised in the current sail will service an Sh5.38 billion KCB loan.

Pocket change for KCB

NBK acquisition will weaken KCB Group’s financials in the short term – Moody’s

Moody’s Investors Service says that the acquisition of the National Bank of Kenya (NBK) would be an immediate credit negative for KCB Group but profitability and funding will strengthen over the next 2-3 years, outweighing these short term effects.

Short term weakened financial

In the short term, the acquisition weakens KCB because NBK has a high stock of problem loans making NBK less solvent than KCB Group. KCB Group will handle the bad loans through write-offs and increase provisioning to reduce risks.

In addition, NBK’s low capitalization will lead to a slight deterioration of KCB Group’s capital adequacy albeit above regulatory requirements and that of global peers. In this case, KCB Group shareholders’ pro forma equity to total asset ratio will decline to 15.0% from 15.9% as of 31 December 2018.

Long-term profitability and funding

However, KCB Group will experience gradually stronger profitability and funding over the next two to three years. First, KCB will integrate Sh58 billion government deposits on NBK’s balance sheet thus the combined entity will hold around 62% of Kenya’s government deposits.

Government deposits are cheaper thus will reduce KCB Group’s overall funding costs. Moreover, the deposits have high net interest margins thus will improve profitability.

Furthermore, KCB Group will diversify its revenue base by generating additional transactional revenue by leveraging on NBK’s large government-related business flows.

There is an expectation of greater operational efficiency once the merged entity integrates and rationalizes the various operating channels.

A gain for Kenyan banking sector

Finally, the banking sector is set to gain from the acquisition by removing a distressed bank through consolidation leading to stability in an overbanked system. KCB Group assets will grow to around KSh830 billion from the Ksh622 billion at year-end 2018. This will consolidate KCB’s leading position in the banking sector with an asset-based combined market share of more than 16%, from 14% as of December 2018.

https://kenyanwallstreet...n-the-short-term-moodys/

Must have been his worst bet
Sept 2013 - Sold Safaricom at 7 bought KCB at 45
2019 Safaricom at 26 KCB at 40

GoK should move most of its deposits to CBK. Why borrow using T-Bills and leave the cash with banks?

Forgive him coz he doesn't know what he's talking about