Corona lagged effect on banks - KCB shaves 43% profit -na bado

[gout]

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Once government defaults - renegotiates - no dividend; it will be dust.

The non-performing loans more than doubled to Sh96.9 billion or 16.8 per cent of the total loan book.

The ramp-up in provisioning overshadowed robust earnings from the mainstay lending business, which saw total interest income jump 23 per cent to Sh63.2 billion.

KCB’s loan book expanded 18.7 per cent to Sh577.5 billion but the lender invested most of its cash in government debt securities to mitigate the risk of defaults.

Its stock of bonds and T-bills surged 91.6 per cent to Sh216.5 billion, contributing to the increase in total interest income.

https://www.businessdailyafrica.com/bd/corporate/companies/kcb-profit-falls-43pc-on-covid-19-defaults-3019046

Well Oigara is optimistic January we will bouncing. Elitist nonsense to blacklist small time hustler borrowers over CBK directives. Evidence has consistently shown small time borrowers pay back. The hustler economy is still resilient. The favorite big boys have bitten dust and now it is dominoes upon dominoes.

https://www.businessdailyafrica.com/bd/corporate/companies/joshua-oigara-this-is-the-year-of-survival-not-thriving-3204162

[RV Pundit]

I am suprised no bank has bitten the dust yet.

Things are truly elephant.

Some business esp those depended on hotel and travel may not recover soon.

[hk]

Once government defaults - renegotiates - no dividend; it will be dust.

The non-performing loans more than doubled to Sh96.9 billion or 16.8 per cent of the total loan book.

The ramp-up in provisioning overshadowed robust earnings from the mainstay lending business, which saw total interest income jump 23 per cent to Sh63.2 billion.

KCB’s loan book expanded 18.7 per cent to Sh577.5 billion but the lender invested most of its cash in government debt securities to mitigate the risk of defaults.

Its stock of bonds and T-bills surged 91.6 per cent to Sh216.5 billion, contributing to the increase in total interest income.

https://www.businessdailyafrica.com/bd/corporate/companies/kcb-profit-falls-43pc-on-covid-19-defaults-3019046

Well Oigara is optimistic January we will bouncing. Elitist nonsense to blacklist small time hustler borrowers over CBK directives. Evidence has consistently shown small time borrowers pay back. The hustler economy is still resilient. The favorite big boys have bitten dust and now it is dominoes upon dominoes.

https://www.businessdailyafrica.com/bd/corporate/companies/joshua-oigara-this-is-the-year-of-survival-not-thriving-3204162

1. Highly unlikely government will default on domestic debt. The most likely option is that interest rates will shoot up reducing government appetite to borrow. But unfortunately banks are awash with deposits since private sector isn't borrowing, so government securities remains the only game in town.
2.Defaults on mobile loans shot up after covid 19 https://www.bloomberg.com/news/articles/2020-05-22/virus-swells-kenya-digital-loans-default-rate-to-23-in-april . Hustler economy depending on the definition is resilient cause it covers the basics which can't be avoided. Almost everyone now is in hustler economy(kadogo economy) including the big boys ( safaricom selling ksh.10 airtime), while middle class centered companies like java coffee collapse.
3. Kenya economy is in free fall no sector is thriving. The good thing is , people and businesses are being forced to reinvent, lower cost of production, change business models etc to survive, its from these ashes that new vibrant companies will emerge.

[Nefertiti]

It seems KCB is doing so badly. Coop shed mere 10% in Q3 - and its profits seem to be 3X KCB    - I must have missed the news. hk?

Co-op Bank Q3 net profit declines by 10 percent

The lender, which is listed on the Nairobi Securities Exchange (NSE), recorded a profit after tax (PAT) of Ksh9.8 billion ($98 million) compared to Ksh10.9 billion ($109 million) in the same period last year, according to the unaudited financial statements released Thursday.

https://www.theeastafrican.co.ke/tea/business/coop-bank-q3-net-profit-declines-3203820


At 10B after-tax profit per quarter- is Coop in Safcom league?

[hk]

It seems KCB is doing so badly. Coop shed mere 10% in Q3 - and its profits seem to be 3X KCB    - I must have missed the news. hk?

Co-op Bank Q3 net profit declines by 10 percent

The lender, which is listed on the Nairobi Securities Exchange (NSE), recorded a profit after tax (PAT) of Ksh9.8 billion ($98 million) compared to Ksh10.9 billion ($109 million) in the same period last year, according to the unaudited financial statements released Thursday.

https://www.theeastafrican.co.ke/tea/business/coop-bank-q3-net-profit-declines-3203820


At 10B after-tax profit per quarter- is Coop in Safcom league?

Not exactly. That's 9 months cumulative profits or 3 quarters. Kcb actaully has made 10.7b vs coop 9.8b in 9 months. Safaricom made about 74b last yr,  Basically safaricom makes more in one quarter than either of the banks makes annually.

[gout]

Uhuru has no sacred ground. Eti cannot default on domestic debt  Suppliers have been wailing and gnashing ttheir teeth for years now.
 
Banks awash from deposits from where? Broke depositors took away their cash. The business are on deathbed. Parastatals are on overdrafts.

People are withdrawing even insurance policies and you expect banks to be awash with cash.

Top insurers confirmed a sharp rise in withdrawals and surrenders, majorly on life assurance and pension products — a trend linked to the coronavirus pandemic which has hurt many livelihoods through jobs losses and pay cuts.

Many policy holders are struggling to sustain payment of premiums while others are opting to use their contributions as collateral for loans as part of a race for survival.

https://www.businessdailyafrica.com/bd/economy/job-cuts-spark-insurance-policy-cash-withdrawals-2571996\

My take is that the banks have found a way of dribling past bookish Njoroge. Covid will eventually pull the rug out.

1. Highly unlikely government will default on domestic debt. The most likely option is that interest rates will shoot up reducing government appetite to borrow. But unfortunately banks are awash with deposits since private sector isn't borrowing, so government securities remains the only game in town.
2.Defaults on mobile loans shot up after covid 19 https://www.bloomberg.com/news/articles/2020-05-22/virus-swells-kenya-digital-loans-default-rate-to-23-in-april . Hustler economy depending on the definition is resilient cause it covers the basics which can't be avoided. Almost everyone now is in hustler economy(kadogo economy) including the big boys ( safaricom selling ksh.10 airtime), while middle class centered companies like java coffee collapse.
3. Kenya economy is in free fall no sector is thriving. The good thing is , people and businesses are being forced to reinvent, lower cost of production, change business models etc to survive, its from these ashes that new vibrant companies will emerge.

[RV Pundit]

Agreed.
Banks are only surviving because they have been allowed to relax accounting reporting...cook books.
The bad loan books must be staggering.
But they were given the greenlight to negotiate terms...and therefore reporting.
Exposure alone from Hotel and accommodation - must be close to 15-20% - and there things are elephant.

Will kenya gov default - domestic nope - they will force Opus dei to print money. Obviously tax collections have taken a hit - but also gov expenditure is low with less travel and usual recurrent nonsense.

External is where they badly need IMF and WB - and that is where things start becoming elephant.

The dollar is the problem - CBK was already fingered for manipulating it - if things goes south - it could get ugly very fast.

if KSH drop to 130-150  - gov will have to default on external debt. We will be back in 1993. Things could go ugly fast.

Don't keep any KShs in any bank. Buy assets.Keep dollars. Kshs will devalue for sometime. Full recovery will be 3yrs at best.

Uhuru has no sacred ground. Eti cannot default on domestic debt  Suppliers have been wailing and gnashing ttheir teeth for years now.
 
Banks awash from deposits from where? Broke depositors took away their cash. The business are on deathbed. Parastatals are on overdrafts.

People are withdrawing even insurance policies and you expect banks to be awash with cash.

Top insurers confirmed a sharp rise in withdrawals and surrenders, majorly on life assurance and pension products — a trend linked to the coronavirus pandemic which has hurt many livelihoods through jobs losses and pay cuts.

Many policy holders are struggling to sustain payment of premiums while others are opting to use their contributions as collateral for loans as part of a race for survival.

https://www.businessdailyafrica.com/bd/economy/job-cuts-spark-insurance-policy-cash-withdrawals-2571996\

My take is that the banks have found a way of dribling past bookish Njoroge. Covid will eventually pull the rug out.

1. Highly unlikely government will default on domestic debt. The most likely option is that interest rates will shoot up reducing government appetite to borrow. But unfortunately banks are awash with deposits since private sector isn't borrowing, so government securities remains the only game in town.
2.Defaults on mobile loans shot up after covid 19 https://www.bloomberg.com/news/articles/2020-05-22/virus-swells-kenya-digital-loans-default-rate-to-23-in-april . Hustler economy depending on the definition is resilient cause it covers the basics which can't be avoided. Almost everyone now is in hustler economy(kadogo economy) including the big boys ( safaricom selling ksh.10 airtime), while middle class centered companies like java coffee collapse.
3. Kenya economy is in free fall no sector is thriving. The good thing is , people and businesses are being forced to reinvent, lower cost of production, change business models etc to survive, its from these ashes that new vibrant companies will emerge.

[Nefertiti]

Is it likely only KCB 43pc decline is telling the truth. Co-ops 10pc look unlikely. Same kenyans really - cooking books.

[Nefertiti]

Covid vaccines are out. Saving grace.

Agreed.
Banks are only surviving because they have been allowed to relax accounting reporting...cook books.
The bad loan books must be staggering.
But they were given the greenlight to negotiate terms...and therefore reporting.
Exposure alone from Hotel and accommodation - must be close to 15-20% - and there things are elephant.

Will kenya gov default - domestic nope - they will force Opus dei to print money. Obviously tax collections have taken a hit - but also gov expenditure is low with less travel and usual recurrent nonsense.

External is where they badly need IMF and WB - and that is where things start becoming elephant.

The dollar is the problem - CBK was already fingered for manipulating it - if things goes south - it could get ugly very fast.

if KSH drop to 130-150  - gov will have to default on external debt. We will be back in 1993. Things could go ugly fast.

Don't keep any KShs in any bank. Buy assets.Keep dollars. Kshs will devalue for sometime. Full recovery will be 3yrs at best.

Uhuru has no sacred ground. Eti cannot default on domestic debt  Suppliers have been wailing and gnashing ttheir teeth for years now.
 
Banks awash from deposits from where? Broke depositors took away their cash. The business are on deathbed. Parastatals are on overdrafts.

People are withdrawing even insurance policies and you expect banks to be awash with cash.

Top insurers confirmed a sharp rise in withdrawals and surrenders, majorly on life assurance and pension products — a trend linked to the coronavirus pandemic which has hurt many livelihoods through jobs losses and pay cuts.

Many policy holders are struggling to sustain payment of premiums while others are opting to use their contributions as collateral for loans as part of a race for survival.

https://www.businessdailyafrica.com/bd/economy/job-cuts-spark-insurance-policy-cash-withdrawals-2571996\

My take is that the banks have found a way of dribling past bookish Njoroge. Covid will eventually pull the rug out.

1. Highly unlikely government will default on domestic debt. The most likely option is that interest rates will shoot up reducing government appetite to borrow. But unfortunately banks are awash with deposits since private sector isn't borrowing, so government securities remains the only game in town.
2.Defaults on mobile loans shot up after covid 19 https://www.bloomberg.com/news/articles/2020-05-22/virus-swells-kenya-digital-loans-default-rate-to-23-in-april . Hustler economy depending on the definition is resilient cause it covers the basics which can't be avoided. Almost everyone now is in hustler economy(kadogo economy) including the big boys ( safaricom selling ksh.10 airtime), while middle class centered companies like java coffee collapse.
3. Kenya economy is in free fall no sector is thriving. The good thing is , people and businesses are being forced to reinvent, lower cost of production, change business models etc to survive, its from these ashes that new vibrant companies will emerge.

[gout]

With IMF in town and with the shilling depreciating printing we will go Zimbabwe. They should have printed earlier before borrowing.

If it is that easy to print why keep borrowing.  Zimbabwe is the answer.

Will kenya gov default - domestic nope - they will force Opus dei to print money. Obviously tax collections have taken a hit - but also gov expenditure is low with less travel and usual recurrent nonsense.

External is where they badly need IMF and WB - and that is where things start becoming elephant.

The dollar is the problem - CBK was already fingered for manipulating it - if things goes south - it could get ugly very fast.

if KSH drop to 130-150  - gov will have to default on external debt. We will be back in 1993. Things could go ugly fast.

[RV Pundit]

Look like they are doing debt rescheduling. Printing is last resort. If Bond holders want to get paid; what do you do?
https://www.businessdailyafrica.com/bd/markets/capital-markets/cbk-switches-sh20bn-bills-to-long-term-bonds-3206532

With IMF in town and with the shilling depreciating printing we will go Zimbabwe. They should have printed earlier before borrowing.

If it is that easy to print why keep borrowing.  Zimbabwe is the answer.

Will kenya gov default - domestic nope - they will force Opus dei to print money. Obviously tax collections have taken a hit - but also gov expenditure is low with less travel and usual recurrent nonsense.

External is where they badly need IMF and WB - and that is where things start becoming elephant.

The dollar is the problem - CBK was already fingered for manipulating it - if things goes south - it could get ugly very fast.

if KSH drop to 130-150  - gov will have to default on external debt. We will be back in 1993. Things could go ugly fast.

[hk]

Uhuru has no sacred ground. Eti cannot default on domestic debt  Suppliers have been wailing and gnashing ttheir teeth for years now.
 
Banks awash from deposits from where? Broke depositors took away their cash. The business are on deathbed. Parastatals are on overdrafts.

People are withdrawing even insurance policies and you expect banks to be awash with cash.

Top insurers confirmed a sharp rise in withdrawals and surrenders, majorly on life assurance and pension products — a trend linked to the coronavirus pandemic which has hurt many livelihoods through jobs losses and pay cuts.

Many policy holders are struggling to sustain payment of premiums while others are opting to use their contributions as collateral for loans as part of a race for survival.

https://www.businessdailyafrica.com/bd/economy/job-cuts-spark-insurance-policy-cash-withdrawals-2571996\

My take is that the banks have found a way of dribling past bookish Njoroge. Covid will eventually pull the rug out.

Drawing some equivalence between non payments to suppliers to defaulting on domestic debt is like night and day. Kenya government can't survive more than one month without issuing new or rolling over debt.  If it were to default, no one would buy new debt or rollover debt. Besides government suppliers aren't businesses just white collar criminals steep in cronyism.
Deposits have risen in the banking industry https://www.centralbank.go.ke/commercial-banks-weighted-average-rates/  deposit rates has come down from 7% to now 6.43%, this shows banks are getting deposits but aren't lending out. KCB says they were lending 10b now 5b, that's 5b idle cash. All banks have allocated provision funds to cover for non performing loans. The question is what percentage of restructured loans are recoverable. This is what will affect banks capitalization. Even when people cash in on their insurance policy that money is deposited in banks again driving up deposits.

[RV Pundit]

Debt servicing to revenue seem to have jumped from 33% last I checked now to 56%. Things are thick. Debt to GDP is now 70% if not more. These are historical unprecedented figures.
https://www.businessdailyafrica.com/bd/economy/broke-kenya-eyes-talks-on-foreign-debt-cancellation--3207984

[hk]

Debt servicing to revenue seem to have jumped from 33% last I checked now to 56%. Things are thick. Debt to GDP is now 70% if not more. These are historical unprecedented figures.
https://www.businessdailyafrica.com/bd/economy/broke-kenya-eyes-talks-on-foreign-debt-cancellation--3207984

Interest rates are going to rise and KSh. is going to depreciate, the only question now its the rate of rise and depreciation. This was inevitable, fiscal irresponsibility epitomized by huge budget deficit is eventually what is going to crush the economy.   Kenya is staring at 1993 all over again, interest rose to over 80% and Ksh. depreciated by more than 300%, lets hope it doesn't get to that level.

[gout]

That governments cannot default is a myth which the insurance case for instance burst. The insurance companies cannot liquidate the bonds and the policy holders want their money (not to deposit in banks but to eat). CBK just magically calls the default rescheduling.

And yes, suppliers also offer credit (another clever name for debt) to the governments. If non payment on time is not default what is it?

More and more Covid will teach us the link between macro and micro economics harsh realities.

[RV Pundit]

That is why nobody want the finance job now - and Borana has it. If COVID-19 continues for a few more months; it will be back to 90s; Banks will start to fail; insurances; and the whole domino!. After exhausting borrowing from IMF/WB - what next??????????. Look like we are going for the final loan almost. Then we start talking about defaulting. We are already in debt re-scheduling. This will be tough few years

[gout]

Seems drunk Rotich and Thugge had started preaching doom at Treasury, reason for the witch hunt. Ufool and the Atwolis cannot take it that reggae has stopped on all fronts. No energy, Few words on Covid or crashing economy. Once Covid goodwill grants stop we can only bank on Biden global recovery marshal plan - that buys us a few more years.

Maybe with vulnerable population wiped out by covid we won't have health burden thus easier economic and social recovery. Too bad for mwafrika obese prime professionals.

That is why nobody want the finance job now - and Borana has it. If COVID-19 continues for a few more months; it will be back to 90s; Banks will start to fail; insurances; and the whole domino!. After exhausting borrowing from IMF/WB - what next??????????. Look like we are going for the final loan almost. Then we start talking about defaulting. We are already in debt re-scheduling. This will be tough few years

[hk]

That governments cannot default is a myth which the insurance case for instance burst. The insurance companies cannot liquidate the bonds and the policy holders want their money (not to deposit in banks but to eat). CBK just magically calls the default rescheduling.

And yes, suppliers also offer credit (another clever name for debt) to the governments. If non payment on time is not default what is it?

More and more Covid will teach us the link between macro and micro economics harsh realities.

There was suggestion to defer interest payments but the pensions and insurance companies refused https://www.standardmedia.co.ke/business/article/2001370399/alarm-over-plan-to-freeze-interest-payments-on-pension-assets . It seems the market worked perfectly with the refusal to accept deferments. The next stop is demanding higher rates for the bonds, that'll will force government to curtail borrowing while pushing banks to lend at higher rate. Once insurance policy are liquidated that money is deposited but all of isn't withdraw immediately. That's the essence of banking that deposits aren't withdraw immediately or at the same time unless there's a run on bank.   

[hk]

That is why nobody want the finance job now - and Borana has it. If COVID-19 continues for a few more months; it will be back to 90s; Banks will start to fail; insurances; and the whole domino!. After exhausting borrowing from IMF/WB - what next??????????. Look like we are going for the final loan almost. Then we start talking about defaulting. We are already in debt re-scheduling. This will be tough few years

This is a great opportunity to offer a turnaround, like what mudavadi did in 1993. 

[RV Pundit]

This will happen under IMF/WB watchful eyes. Trust them on that. Once we borrow the last bit - 4B dollars - we will be back to their arms - and they will be prescribing very serious medication - to sort out many issues - and flying every six months.  And without them - Kenya economy goes to dogs. Already the G20 have given IMF/WB that mandate to deal with irresponsible countries...and China has gone in there too....so IMF/WB will run the show.

Already they have asked we raise taxes. If that doesn't work - they will ask we cut expenses.

It will be painful reforms - kenyans will pay or repay the loans plus interest - development will be in viusasa - salaries will be slashed - employment cut - and even retrenchment started.

This is a great opportunity to offer a turnaround, like what mudavadi did in 1993.