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THE - ST AR.CO.KE Friday, August 5, 2016 NEWS BUSINESS 13 SH10B e amount KCB is seeking to raise through a rights issue THE DATA CEO Joshua Oigara said the planned cash call has been rescheduled to a later date. e issue involves creation of one billion new ordinary shares with a nominal value of one shilling. BREXIT AFTERMATH earnings S Sudan instability cuts KCB assets by Sh6.6bn Profit after tax rose 13.64 per cent to Sh10.5 billion, helped by a 15.83 per cent growth in net interest earnings to Sh22.53 billion KCB Group’s nosediving business in war-torn South Sudan continued to hit the lender, with assets in six months to June falling by a marginal 1.17 per cent or Sh6.6 billion com- pared to same period in 2015. Assets declined to Sh559.94 billion in the half-year period from Sh566.60 billion the year before, the lender re- ported yesterday. Chief finance officer Lawrence Kimathi told investors in Nairobi its subsidiary in South Sudan posted KCB boss Joshua Oigara at the release of the bank’s second quarter financial results in Nairobi yesterday /ENOS TECHE about 70 per cent loss in value in its balance sheet. “e subsidiary’s ac- counts in South Sudan pound are not too bad, but there is a big impact after conversion to Kenya shilling,” Kimathi said. South Sudan pound has depreciated by more than 500 per cent against the dollar since December last year when the country switched from a fixed to a floating exchange rate regime. A float- ing exchange-rate allows a currency to fluctuate in response to foreign-ex- change market mechanisms. Kimathi, however, said the subsid- iary contribution to the group’s reve- nue dropped from 11 per cent in June 2015 to four per cent this year. KCB’s deposit also fell by Sh9.61 billion or 2.17 per cent in the half-year period to Sh433.42 billion compared to a year earlier. Net loans, however, grew by Sh26.79 billion or 8.35 per cent to Sh347.39 bil- lion. Profit after tax rose 13.64 per cent to Sh10.5 billion, helped by a 15.83 per cent growth in net interest earnings to Sh22.53 billion. Group CEO Joshua Oigara said profitability was maintained through venturing into new business lines and enhancing a tight cost management structure. He said South Sudan still has good prospects for business but KCB has slowed down on lending., to focus more on transaction fees. @Richiymungai RICHARD MUNGAI A bad first impression can be hard to shake. But changing how others view you is not impossible. Here are four ways to overturn entrenched beliefs: Surprise people. For example, if you’ve developed a reputation for never speaking up, make a point of being the first person to speak in meetings, and make multiple comments. Overcompensate over time. Bombard people with a lot of evidence to suggest that their first impression was wrong — do it not just once, but consistently. Get closer to people. If you’ve started out on the wrong foot with someone, don’t avoid them. Find ways to get to know them better so they can see who you really are. Wait it out. Sometimes the bad impression your colleague formed has nothing to do with you. If you’re patient and continue to act in ways you’re proud of, most people will come around eventually. OVERCOME A BAD FIRST IMPRESSION Currency Buy Sell Mean US DOLLAR 101.3067 101.5067 101.4067 STG POUND 134.8061 135.1289 134.9675 EURO 112.9600 113.2194 113.0897 SA RAND 7.2830 7.3026 7.2928 KES / USH 33.1505 33.3147 33.2326 KES / TSH 21.5060 21.6471 21.5766 AE DIRHAM 27.5807 27.6359 27.6083 JPY (100) 99.8292 100.0756 99.9524 INDIAN RUPEE 1.5134 1.5166 1.5150 CHINESE YUAN 15.2579 15.2924 15.2752 Price Change (%) EXPRESS 3.40 +7.94 UCHUMI 3.45 +6.15 NSE 19.70 +5.91 EAAGADS 21.00 +5.00 E.A. PORTLAND 30.00 +3.45 Price Change (%) OLYMPIA CAPITAL 2.30 -9.80 CROWN BERGER 42.50 -5.56 PAN AFRICA 36.00 -5.26 FAHARI-REIT 15.50 -5.20 MUMIAS 1.20 -4.00 financial market FOREX EXCHANGE RATES NSE BIGGEST MOVERS NSE BIGGEST LOSERS K CB is the biggest bank in Kenya and region, notwithstanding a -1.17 per cent decrease in total assets which clocked Sh555.941 billion. e decrease was a result in the devalu- ation of the South Sudanese pound. South Sudan represented 9.2 per cent of total full-year revenue in 2014 and counter-intuitively, serving up a +14.335 per cent acceleration in half-year 2016 profit before tax against. at backdrop of rebasing was a plain commendable outcome. e South Sudanese business is now rebased, loan book size is less than $30 million and 97 per cent is transactional business. e earnings release spoke to an underlying strength in Kenya, where profit before tax clocked a +19 per cent rise versus +14.335 per cent at the Group level. Joshua Oigara, the CEO, has always been a digital outlier and even an algorithmic banker, and KCB reported that it now has 6.5 million cus- tomers on KCB-MPesa and Sh11 billion have been disbursed via that platform. ere has been a 47 per cent growth in channel revenue with 78 per cent of all transactions now conducted outside the branch. ‘’We believe the future of banking is in digital. We are reimagining digital financial services to complement the traditional brick and mortar model that was in yesteryears – the hallmark of banking. We have continually rejigged our digital strategy to align it with the global direction of flight as far as tech- nology is concerned,’’ Oigara said. e rights issue has been a bearish overhang on the stock and KCB con- firmed that strong international cash generation coupled with debt ($100 million being looked for but already $200 million of offers) mean that the pro- posed rights issue is rescheduled. is is a bullish development for the price. We learnt that KCB has the grand total of Sh17,000.000 lent out to the board. e small insider loans emits a powerful corporate governance signal. Regarding Chase Bank, the CEO was forthright and definitive and said: ‘’Our job is now done’’ and that KPMG, the Central Bank and the KDIC were set to take over. Some international shareholders had seen Chase as a distraction, and I think that too had lent on the share price. I noticed some confusion around the provisioning. Essentially at a group level, KCB reduced total provisions by 20 per cent. is was because of a very severe provision made in the previous year. Kenya provisioning was up +22 per cent, but management were confident around the recovery. KCB closed out the trading session at Sh32.00, +1.59 per cent. e share price has been oversold. e core franchise is a real solid one and as Oigara said “we are a lion, we pounce’’. e South Sudan business is rebased and repositioned. Looking through the noise, the signal in this is a strong Franchise which is resilient and well managed. e writer is a financial analyst EXPERT COMMENT ALY KHAN SATCHU KCB still biggest despite decline in its assets REUTERS/ e Bank of England cut interest rates yesterday for the first time since 2009. It also revived its bond-buying programme saying it will take “whatever action is necessary” to achieve stability in the wake of Britain’s vote to leave the European Union. e central bank said it expected the economy to stagnate for the rest of 2016 and suffer weak growth throughout next year. It cut its main lending rate to a record low 0.25 per cent from 0.5 per cent, in line with market expectations. But it also launched two new schemes, one to buy 10 billion pounds of high-grade corporate bonds and another – potentially worth up to 100 billion pounds – to ensure banks keep lending even after the cut in interest rates. Sterling fell one per cent against the dollar following the announcement, while British government bond yields hit record lows and the main share index rose by one per cent. Most Monetary Policy Committee members also expected to cut Bank Rate again this year. “Following the United Kingdom’s vote to leave the European Union, the exchange rate has fallen and the outlook for growth in the short to medium term has weakened markedly,” the central bank said. Bank of England cuts rates to a record low of 0.25 per cent
