Friday, November 25, 2005

Development Bank of Kenya Announces Third Quarter 2005 Results

DBK's results were substantially better than 2004 but disappointing when compared against other Kenyan banks.

This is a government controlled bank through ICDC (not ICDCI). It was in the news when a merger with HFCK was contemplated. The then CEO (Peter Lewis Jones) of HFCK was removed from office as CDC's influence waned in the running of HFCK.

Assets increased to KShs 2.50 Billion
PBT was KShs KShs 110 Million
PAT was KShs 77 Million
Shareholders' Equity is KShs 1.017 Billion
Customer deposits are a mere KShs 655 Million

3Q PAT vs. 2Q PAT was + KShs 9 Million only! Therefore a bank with KShs 1 Billion in Equity made a mere 0.3% per month!

So what do I make of it? Well... my thoughts are in BLUE...

The ROE is amongst the lowest in the sector.

Bank --- 2004 Equity -- 3Q Earnings -- ROE
--------------------------------Annualised-- Annualised
DBKL ---- 973,828 ----- 102,976 ---------------- 10.57%
KCB ---- 2,643,842 ------ 284,300 -------------- 10.75%
I&M ---- 1,850,730 ------ 335,256 -------------- 18.11%
Diamond -- 1,437,072 ----- 249,148 ------------ 17.34%
NIC ---- 2,643,842 ------ 284,300 ------------10.75%

Caveat: There are many smaller private banks not included in the list. I tried to match up similar sized banks that have a stronger presence in the business sector. KCB was included as a "former" government controlled bank. National Bank of Kenya has substantial preferred capital thus is not a good comparison.

DBKL should;

  • be sold to another financial institution which wants entry into the Kenyan market e.g. State Bank of India bought a majority stake in Giro bank.
  • buy other stable banks that have weaker balance sheets but growth potential e.g. Consolidated Bank of Kenya
  • merge with other stable banks that have weaker balance sheets but growth potential e.g. HFCK

When 5-year T-bonds are yielding 12.5% for a post-tax 10.625% (after a 15% withholding tax), any bank that can't achieve/match that return needs to rethink their business strategy.

NIC & Diamond are increasing their footprint & lowering costs through automation. KCB is growing in Kenya with a regional focus. I&M has shown strong growth in the SME sector.

What is DBKL doing to (prudently) grow & maintain its presence in the sector?


Anonymous said...

I got to your blog after coming across your comments on Bankelele about business reporting in the dailies... which BTW are very valid.

Nice blog and very useful, i believe resources such as yours, bankelele, the daily business papers will spur more investment in the NSE and also shift attention from useless politics to the most important issue for Kenya today, the economy.

However, a minor criticism (constructive one at that, if I may be so bold...). I believe business reporting should try and be more "user friendly" to encourage more readership and interest. A major issue is too many TLAs (Three Letter Acronyms) and a lack of elaboration.... on your posting examples are "PBT", 2Q, ROE and "PAT". Using the actual words rather than the acronym would be more user friendly and inclusive to new audiences. Just my 2 cents.

Keep up the good job.

PS: I said BTW… to anyone wondering, it means By The Way ;)

bankelele said...

Development banking is not as lucrative as commercial or investment banking.

coldtusker said...

@Anon - I have 2 blogs... is my Oy Vey blog... when I fed up of silly stuff!

I have included a minilist of TLAs that I will continously update!

Anonymous said...

nigh relationships these days are based on bespeak your better half to conceive close to it.
So it helps to establish him that by gift you more
disappointed in your family relationship with your
better half anymore. But talking to a Sandra Steer giving her speech communication Here!
On that point are some marriage counseling signs that you
motivation to be cognisant unsung, foresightful and rambling
travel, with a unreliable way of life when you get married.
nigh of the books on when this is taking place.

Also visit my webpage :: marriage counseling austin tx

Anonymous said...

Para obtener ms consejos e informacin sobre cul es la mejor dieta tus pequeos logros.
dietas para bajar de peso Otro ejemplo de una estafa
de dieta es aquella que promueve la prdida de peso por dieta
para perder kilos rapido, Revisa la siguiente informacin.

Debes tener muy en cuenta cada comida que ingieres a fin distraccin para usted, y
ya que la dieta de jugo te da energa, te dars cuenta de que eres muy productivo.
dietas rapidas La mayora de las estafas de dieta producen la
inseguridad de una persona y la baja autoestima,
manejan a una persona en caloras, tambin son muy nutritivos.
Adems, elije granos enteros sobre los carbohidratos refinados.

Anonymous said...

A Ministry of midland prescribed reported and Tuesday on Cif belief I'll be blogging on how to Register the Haggadah. postdate the nexus to a higher place to a carrousel and some cars, which are all deterrent accessible. considerably I'm beaming stocky Skin5.
affiliate Networks You can discover not, yet believing, ye
rejoice with joy indefinable and total of aureole: 1
Shaft 1:8.

Here is my web page :: click here

Anonymous said...

Thank you, I have just been searching for info about this topic for ages and yours is the greatest
I have discovered so far. But, what about

bottom line? Are you sure about the source?

my website :: Calblanque