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SCB (ZM)
The Zambian economy has recorded phenomenal growth on the back of a buoyant copper demand mainly from the Chinese market and also unexpected groth in agriculture particularly tobacco farming (thanks to economic meltdown in Zimbabwe) and the flower industry. Tourism sector continues to expand with particular emphasis on marketing the Victoria falls. A number of new foreign investors have injected funds into the country. Standard Chartered Bank and Barclays are some of the major internationally accredited banks in the Zambian market and have been bank rolling most of this growth. SCB share value has grown tremendously since January from K 161 to K434 by June 2007. The continued development in telecommunications and general road infrastructure and renewed interests from the far east markets (China) will mean increased business activity for the bank.
Barclays (BW)
With a market capitalisation of BPW 8 billion Barclays is no longer the market leader in Botswana after being overtaken by FNB and Standard chartered bank however the bank continues to exhibit strong and consistent returns over the past three years and this trend is expected to continue growing. Barclays first half results show a net interest income growth of (27% June) 2007over the same period 2006 declaring a dividend in the process payable in October 2007. Barclays by its nature is a long term buy as the company is not only mature but very stable and will continue to attract long term financial deals.
FNB (BW)
In terms of market capitalisation FNB is now firmly the leader on the Botswana stock board boasting of 25% of the exchange capitalisation. This enables FNB critical mass to undertake big investment projects being spear headed by the government and has a natural preference from South African companies undertaking investment projects ion Botswana due to its affiliation with FNB South Africa. FNB is a good medium to long term investment (9 months to 2 years). In its unaudited results of June 07 earnings for the year and earnings per share both went up 22.4% with a dividend for the year of 9.84 thebe.
First Bank (NG)
First Bank is reputed to be one of the oldest and strongest bank in Nigeria with a good track record of delivering good results. FBN has recorded sustained profitability in 2007. The bank's profit before tax rose by 44.5% from N13.17 billion in 2006 to N19.04 billion in 2007, while profit after tax grew by 47% from N10.23 billion in 2006 to N15.04 billion in 2007. The bank has been recently on the market to raise its capital base by N100 billion but was over subscribed to almost N500billion and only absorbed N250b of that. With such a strong asset base and a very strong corporate and consumer /retail portfolio first bank will remain a stable and attractive destination for individual and institutional investors and share price is expected to grow . First bank although it continues to focus on its core business of banking in a very conservative manner , it has continued to invest in expanding its human skills base and technological advancement. In a market where financial insititutuions are becoming overwhelmingly bullish conservatism of a bank is strong sign of strength not weakness. The share price of N42 HAS room for growth with the improvement in inflation and overall economic growth.
Ecobank Nigeria
Has expanded significantly its business operations to becoming a Pan African operator and a first West Africa , with operations in Nigeria, Cameroon, Cote Divoire , Rwanda, Senegal , Chad , Benin and 11 other countries totalling 19 countries in West and Central Africa. The business has expanded its retail network from 78 in 2002 to 305 in 2006 and profit after tax from US.6 m to USm in 2006. Ecobank will continue to enjoy the diversified benefits of a Pan African operation and leverage on expanding upcoming economies such S Sierra Leone and Chad. The bank has recently adopted a more aggressive marketing approach and backed by a solid asset base with a share price of N7it still remains a strong investment tool
AIICO NG
The Nigeria insurance industry was recently revamped through a government consolidation exercise which saw a number of consolidations for companies to meet the minimum regulatory requirements in terms of recapitalisation. This saw a reduction of insurance companies from more than 100 to only 61 and 2 reinsurance companies. AIICO 's products ranges from general insurance, life policies investment linked products, group business products. As the economy becomes more sophisticated in Nigeria the insurance demands are going to grow and the new recapitlalisation has brought sanity into this industry and AIICO with its established reputation is expected to benefit from this development. AIICO is an attractive future stock and diversified to capture individual and corporate needs of Nigerian market
CFC Bank
The bank is currently in major talks with Standard Bank (Stanbic) of South Africa . These discussions can critical change the entire outlook of the banking sector if they are successfully concluded in Kenyan market . The merger could position CFC as the highest capitalised bank on the Nairobi stock exchange which positions the bank comfortable to compete with the traditional powerhouses such as Barclays bank. Equally important is the networking effect Stanbic brings to the table through its South African and Pan African operations in Nigeria, Zambia, Botswana and South Africa. This will remain a highly profitable short term investment as the merger will attract a lot of diversified interest in the bank. More competition in this sector will also come from Equity bank which is merging with a London based venture capital firm thereby increasing Equity 's profile and capital base to unprecedented levels.
Housing Finance Co (KQ)
Housing Finance Corporation of Kenya (HFCK) is Kenya leading mortgage companies engaging in both commercial and residenti al mortgage banking. HFCK has over 35 years of experience in the mortgage business and has expanded over the years to offer a wide range of Financial services including banking accounts. In Africa the housing mortgage sector is relatively dead and presents one of the biggest growth opportunities precipitated by huge demand for housing generally. Although this sector is set to attract a lot of interest from commercial banks the Housing finance company will enjoying the first mover advantage. Although the company will exercise more caution after the sub prime mortgage crisis in Europe and America it is expected generally that the key lessons from that crunch have been dully factored into the business model. In any case the mortgage industry is still not that sophisticated and is still highly conservative and corporate driven. With a market capitalisation of K4.4 billion this company has growth potential through a recapitalisation exercise.
Barclays Bank Kenya
Barclays Kenya is currently the la rgest business unit in the Barclays Africa family in terms of contribution to profit and size of operations. In Kenya, i t boasts of a balance sheet worth US$ 1 billion which is equivalent to 10% of the country's GDP.
The bank is the m ar ke t leader in the retail segment and is aggressively growing its corporate business with numerous world class financ ial se rvices products. The bank pioneered the concept of unsecured retail lending in Kenya where it currently holds a mark et s hare of 30%.
The bank has 69 outlets across the country , with the Queensway house branch in Nairobi being t he la rgest . All the outlets are computer linked making it possible for customers to access their accounts from any bra nch as if it were their own home branch for all their cash and cheque transactions. In addition it has 82 ATMs, the la rgest n umber b y any bank in Kenya.
Barclays Kenya was listed on the Nairobi Stock Exchange in 1986 and currently has 34,000 sharehol ders. Its shares are some of the most sort after and are popular with both institutional and retail customers.
Equity Bank Kenya
The bank posted Ksh. 1.1 billion in its profits before tax up from Ksh. 501 million in 2005 representing a 120 per cent growth in the financial year ending December 31, 2006. The unbending growth curve, seemingly tethered to the good times means the over 100 per cent growth in pre tax profit is consistent with the recent milestone where the bank clocked the one million customers mark - making it control over 30 percent of all bank accounts in the country.
Total assets grew by 74 percent from Ksh. 11.5 billion in December 2005 owing to the continued expansion in branch network, staff costs and marketing costs during a year when the bank became the first private owned indigenous bank to be listed on the Nairobi Stock Exchange. Despite the increase, the ratio of operating expenses to total income improved as the bank begins to leverage its investment in ICT. In spite of the heavy operational expenses, operation income increased from Ksh. 1.8 billion to Ksh. 3.4 billion.
The investments in ICT in mid 2005 is now coming to fruition as demonstrated by the efficiency levels of the bank where the cost of transactions have gone down, processing speed of transactions doubled while most cash withdrawals are concentrated in the ATMs. Overall, the positive growth in profitability was also supported by the improved economic fortunes of the country but the bank has also significantly benefited from the robust IT platform that has seen it open up other alternative delivery channels such as Internet Banking, SMS Banking and others expected to follow.
The balance sheet demonstrates the bank's growing strength with emphasis on intermediation and efficient allocation of funds to maximize value to the stakeholders. The bank has also benefited from the increased brand visibility following its listing last year and the penetration strategy of increasingly moving to rural populations and the under banked sectors continues to significantly impact on any future growth.
Gross loan portfolio increased significantly from Ksh. 5.9 billion to Ksh. 11.4 billion due to increased lending mainly to the agricultural sector and the broader small and medium and micro enterprises. Despite the increase in the loan portfolio, the level of non-performing loans relative to the loan portfolio remains quite low owing to strict focus on prompt follow up and recovery. Interest income on the loans went up by 117 percent from Ksh. 692 million to Ksh. 1.5 billion.
The bank's core capital increased from Ksh. 1.4 billion to Ksh. 2.2 billion following the listing and is expected to increase significantly after the Board announced plans to issue two bonus shares for each held to support its growth strategy. The issue of the bonus shares is however subject to approval of Capital Markets Authority at the forthcoming AGM at the end of March 2007.