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19 Pages«<171819
KCB 2018 and Beyond
obiero
#361 Posted : Friday, September 06, 2019 9:27:44 PM
Rank: Elder


Joined: 6/23/2009
Posts: 12,179
Location: nairobi
VituVingiSana wrote:
obiero wrote:
VituVingiSana wrote:
Ericsson wrote:
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...-the-short-term-moodys/

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

You expect, for example, a road project by KENHA in Loitoktok to be administered via a CBK account and not a commercial bank? Contractors certificate based payment to be done by CBK minus KENHA mandated signatories on the ground? What would such a scenario imply on the liquidity ratio of most Kenyan banks?

A commercial bank can do all you say, with KenHa approving the payment, and then submit a "debit note" to CBK for payment/credit in the Clearing House.

CBK then credits the bank eg KCB for the amount of the debit note AFTER the bank eg KCB and KENHA have completed their approvals and paid the contractor.

The bank/KCB can charge a fee for the service to KENHA. So far CBK gas not bounced cheques.

You make it sound simple but you know the system is not as effective as you want it to be
COOP 5,500; KCB 7,500; KNRE 100,000; KQ 221,100
VituVingiSana
#362 Posted : Friday, September 06, 2019 9:46:20 PM
Rank: Chief


Joined: 1/3/2007
Posts: 16,288
Location: Nairobi
obiero wrote:
VituVingiSana wrote:
obiero wrote:
VituVingiSana wrote:
Ericsson wrote:
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...-the-short-term-moodys/

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

You expect, for example, a road project by KENHA in Loitoktok to be administered via a CBK account and not a commercial bank? Contractors certificate based payment to be done by CBK minus KENHA mandated signatories on the ground? What would such a scenario imply on the liquidity ratio of most Kenyan banks?

A commercial bank can do all you say, with KenHa approving the payment, and then submit a "debit note" to CBK for payment/credit in the Clearing House.

CBK then credits the bank eg KCB for the amount of the debit note AFTER the bank eg KCB and KENHA have completed their approvals and paid the contractor.

The bank/KCB can charge a fee for the service to KENHA. So far CBK gas not bounced cheques.

You make it sound simple but you know the system is not as effective as you want it to be
It can be simplified or made easier as CBK, KBA (banks) and GoK (KENHA) automate/digitize their payment processes.
Listed firms pay dividends via CDSC/Registrars who use cheques, EFT/RTGS and M-Pesa.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Ericsson
#363 Posted : Sunday, September 08, 2019 5:31:20 PM
Rank: Elder


Joined: 12/4/2009
Posts: 7,227
Location: NAIROBI
VituVingiSana wrote:
obiero wrote:
VituVingiSana wrote:
obiero wrote:
VituVingiSana wrote:
Ericsson wrote:
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...-the-short-term-moodys/

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

You expect, for example, a road project by KENHA in Loitoktok to be administered via a CBK account and not a commercial bank? Contractors certificate based payment to be done by CBK minus KENHA mandated signatories on the ground? What would such a scenario imply on the liquidity ratio of most Kenyan banks?

A commercial bank can do all you say, with KenHa approving the payment, and then submit a "debit note" to CBK for payment/credit in the Clearing House.

CBK then credits the bank eg KCB for the amount of the debit note AFTER the bank eg KCB and KENHA have completed their approvals and paid the contractor.

The bank/KCB can charge a fee for the service to KENHA. So far CBK gas not bounced cheques.

You make it sound simple but you know the system is not as effective as you want it to be
It can be simplified or made easier as CBK, KBA (banks) and GoK (KENHA) automate/digitize their payment processes.
Listed firms pay dividends via CDSC/Registrars who use cheques, EFT/RTGS and M-Pesa.

Not happening any time soon
VituVingiSana
#364 Posted : Monday, September 09, 2019 12:16:11 AM
Rank: Chief


Joined: 1/3/2007
Posts: 16,288
Location: Nairobi
Ericsson wrote:
VituVingiSana wrote:
obiero wrote:
VituVingiSana wrote:
obiero wrote:
VituVingiSana wrote:
Ericsson wrote:
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...-the-short-term-moodys/

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

You expect, for example, a road project by KENHA in Loitoktok to be administered via a CBK account and not a commercial bank? Contractors certificate based payment to be done by CBK minus KENHA mandated signatories on the ground? What would such a scenario imply on the liquidity ratio of most Kenyan banks?

A commercial bank can do all you say, with KenHa approving the payment, and then submit a "debit note" to CBK for payment/credit in the Clearing House.

CBK then credits the bank eg KCB for the amount of the debit note AFTER the bank eg KCB and KENHA have completed their approvals and paid the contractor.

The bank/KCB can charge a fee for the service to KENHA. So far CBK gas not bounced cheques.

You make it sound simple but you know the system is not as effective as you want it to be
It can be simplified or made easier as CBK, KBA (banks) and GoK (KENHA) automate/digitize their payment processes.
Listed firms pay dividends via CDSC/Registrars who use cheques, EFT/RTGS and M-Pesa.

Not happening any time soon
There was a plan to bring the cash in-house to CBK. Sooner than later is better to reduce the burden on Taxpayers.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Ericsson
#365 Posted : Monday, September 09, 2019 9:42:36 AM
Rank: Elder


Joined: 12/4/2009
Posts: 7,227
Location: NAIROBI
VituVingiSana wrote:
Ericsson wrote:
VituVingiSana wrote:
obiero wrote:
VituVingiSana wrote:
obiero wrote:
VituVingiSana wrote:
Ericsson wrote:
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...-the-short-term-moodys/

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

You expect, for example, a road project by KENHA in Loitoktok to be administered via a CBK account and not a commercial bank? Contractors certificate based payment to be done by CBK minus KENHA mandated signatories on the ground? What would such a scenario imply on the liquidity ratio of most Kenyan banks?

A commercial bank can do all you say, with KenHa approving the payment, and then submit a "debit note" to CBK for payment/credit in the Clearing House.

CBK then credits the bank eg KCB for the amount of the debit note AFTER the bank eg KCB and KENHA have completed their approvals and paid the contractor.

The bank/KCB can charge a fee for the service to KENHA. So far CBK gas not bounced cheques.

You make it sound simple but you know the system is not as effective as you want it to be
It can be simplified or made easier as CBK, KBA (banks) and GoK (KENHA) automate/digitize their payment processes.
Listed firms pay dividends via CDSC/Registrars who use cheques, EFT/RTGS and M-Pesa.

Not happening any time soon
There was a plan to bring the cash in-house to CBK. Sooner than later is better to reduce the burden on Taxpayers.


That is not the problem.Problem is government to manage cashflow better,reduce the bureaucratic processes in project implementations,not to budget for new projects before completing the previous ones.
But these are done intentionally for corruption purposes.
VituVingiSana
#366 Posted : Tuesday, September 10, 2019 1:25:25 AM
Rank: Chief


Joined: 1/3/2007
Posts: 16,288
Location: Nairobi
Regulator now bars KCB from sacking National Bank staff
https://www.businessdail...266678-4f8gaq/index.html
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Ericsson
#367 Posted : Tuesday, September 10, 2019 5:39:51 AM
Rank: Elder


Joined: 12/4/2009
Posts: 7,227
Location: NAIROBI
VituVingiSana wrote:
Regulator now bars KCB from sacking National Bank staff
https://www.businessdail...ator-now-bars-KCB-from. -sacking-National-Bank-staff/4003102-5266678-4f8gaq/index.html


For one and a half years.That is good news
But that doesn't stop KCB from offering voluntary retirement package on a willing basis.
Ericsson
#368 Posted : Tuesday, September 10, 2019 10:55:00 AM
Rank: Elder


Joined: 12/4/2009
Posts: 7,227
Location: NAIROBI
After their merger
KCB /NBK will have a 16.51% share of banking services in Kenya,
then NIC/CBA (10.67%)
Cooperative (9.93%)
Equity (9.85%)
Standard Chartered (7.11%)
Diamond Trust (6.72%)
Barclays (6.57%)
CFC Stanbic (5.65%)
I & M Bank (4.78%)
@CAK_Kenya
Angelica _ann
#369 Posted : Tuesday, September 10, 2019 11:04:22 AM
Rank: Elder


Joined: 12/7/2012
Posts: 10,791
Ericsson wrote:
After their merger
KCB /NBK will have a 16.51% share of banking services in Kenya,
then NIC/CBA (10.67%)
Cooperative (9.93%)
Equity (9.85%)
Standard Chartered (7.11%)
Diamond Trust (6.72%)
Barclays (6.57%)
CFC Stanbic (5.65%)
I & M Bank (4.78%)
@CAK_Kenya


I see a scenario where once BBK/ABSA branding is through, Standard Chartered Bank will gain some of the 'older' version of BBK customers who have roots in the UK and Europe.
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
wukan
#370 Posted : Tuesday, September 10, 2019 11:17:54 AM
Rank: Veteran


Joined: 11/13/2015
Posts: 1,183
Angelica _ann wrote:
Ericsson wrote:
After their merger
KCB /NBK will have a 16.51% share of banking services in Kenya,
then NIC/CBA (10.67%)
Cooperative (9.93%)
Equity (9.85%)
Standard Chartered (7.11%)
Diamond Trust (6.72%)
Barclays (6.57%)
CFC Stanbic (5.65%)
I & M Bank (4.78%)
@CAK_Kenya


I see a scenario where once BBK/ABSA branding is through, Standard Chartered Bank will gain some of the 'older' version of BBK customers who have roots in the UK and Europe.


Does not matter anymore the role of UK, Europe investors in the Kenyan economy has been shrinking ever since Kibaki looked east. The future is Afro-Asian. ABSA ditching that beberu BBK tag will work for them in the long run.
Angelica _ann
#371 Posted : Tuesday, September 10, 2019 11:20:58 AM
Rank: Elder


Joined: 12/7/2012
Posts: 10,791
wukan wrote:
Angelica _ann wrote:
Ericsson wrote:
After their merger
KCB /NBK will have a 16.51% share of banking services in Kenya,
then NIC/CBA (10.67%)
Cooperative (9.93%)
Equity (9.85%)
Standard Chartered (7.11%)
Diamond Trust (6.72%)
Barclays (6.57%)
CFC Stanbic (5.65%)
I & M Bank (4.78%)
@CAK_Kenya


I see a scenario where once BBK/ABSA branding is through, Standard Chartered Bank will gain some of the 'older' version of BBK customers who have roots in the UK and Europe.


Does not matter anymore the role of UK, Europe investors in the Kenyan economy has been shrinking ever since Kibaki looked east. The future is Afro-Asian. ABSA ditching that beberu BBK tag will work for them in the long run.


ABSA is still very much apartheid tag to me.
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
Ericsson
#372 Posted : Tuesday, September 10, 2019 11:32:51 AM
Rank: Elder


Joined: 12/4/2009
Posts: 7,227
Location: NAIROBI
Angelica _ann wrote:
Ericsson wrote:
After their merger
KCB /NBK will have a 16.51% share of banking services in Kenya,
then NIC/CBA (10.67%)
Cooperative (9.93%)
Equity (9.85%)
Standard Chartered (7.11%)
Diamond Trust (6.72%)
Barclays (6.57%)
CFC Stanbic (5.65%)
I & M Bank (4.78%)
@CAK_Kenya


I see a scenario where once BBK/ABSA branding is through, Standard Chartered Bank will gain some of the 'older' version of BBK customers who have roots in the UK and Europe.


Barclays Plc still has a 15% stake in ABSA
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