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Equity Bank Holdings Ltd recorded a 14 per cent decline in net profit for the three months to March 31, 2020. PHOTO | DENNIS ONSONGO | NATION MEDIA GROUP The Nairobi Securities Exchange-listed lender saw its profit after tax fall to Ksh5.28 billion ($52.8 million) from Ksh6.15 billion ($61.5 million).

The management took a conservative approach to surviving the economic downturn by increasing loan loss provision by Ksh3.11 billion ($31.1 million) from Ksh409.89 million ($4.09 million) in the same period last year.

Equity Bank Holdings Ltd recorded a 14 per cent decline in net profit for the three months to March 31, as a result of increased loan loss provisioning to cushion businesses against uncertainties caused by the Covid-19 pandemic.

The Nairobi Securities Exchange-listed lender saw its profit after tax fall to Ksh5.28 billion ($52.8 million) from Ksh6.15 billion ($61.5 million). The management took a conservative approach to surviving the economic downturn by increasing loan loss provision by Ksh3.11 billion ($31.1 million) from Ksh409.89 million ($4.09 million) in the same period last year.

Equity’s regional subsidiaries in Uganda, Tanzania, Rwanda, South Sudan and the Democratic Republic of Congo accounted for a combined 26 per cent of the group’s bottom line, compared with 17 per cent in the same period last year.

The Covid-19 pandemic has hit global economies, paralysing economic activities and pushing households into financial distress.

“The global Covid-19 pandemic has mutated into a global economic crisis, occasioned by a sudden standstill of economic activity as a result of the global lockdown. This has introduced unprecedented uncertainty within the global financial systems prompting us to adopt a conservative approach, fortifying our balance sheet and assuring ample liquidity to support our customers,” said Equity Group chief executive James Mwangi.

According to Mr Mwangi, the Group’s business model of high-volume low margins with non-funded income contributing 42 per cent of total revenues and a low cost of funding enables the bank to navigate a period of compressed interest margins on loans and advances and other interest earning assets.

The group’s total income grew 13 per cent to Ksh19.85 billion ($198.5 million) from Ksh17.61 billion ($176.1 million), with regional subsidiaries’ combined contribution to total revenues increasing to 30 per cent from 28 per cent in the same period last year.

According to the group’s unaudited financial statements released last week, total interest income grew 14 per cent to Ksh15.42 billion ($154.2 million) from Ksh13.49 billion ($134.9 million) and […]

Performance at the Uganda Securities Exchange slowed down during April partly due to Covid-19. According to the notice, if a company elects to hold a virtual annual general meeting, it will have to submit a notice to USE in regard to how the meeting will be executed.

Performance at the Uganda Securities Exchange slowed down during April partly due to Covid-19.
The fall was noticeable in the movement of the All Share Trade Index, which determines the average value of share prices of all companies on a stock exchange.
In the period, All Share Trade Index dropped to 1362.06 points 2020 compared to 1800.72 points in January while Local Share Index dropped to 341.63 points compared to 350.25 points in January.

Speaking during a briefing on the outlook and impact resulting from the Covid-19 related lockdown, Mr Paul Bwiso, the Uganda Securities Exchange (USE) chief executive officer, said most traders, who are international investors, had stayed away due to lockdowns, noting “we are putting mechanisms in place to have them back through new measures such as the electronic account opening module.
The exchange, which had witnessed an increase in turnover during March, registered a drastic decline to Shs1.41b in April.

Stanbic and Umeme, which have for years accounted for the highest traded shares, were the most active counters with Umeme accounting for 93.76 per cent of traded turnover while Stanbic accounted for 6.8 per cent in April.
Umeme accounted for 60.65 per cent of traded volumes while Stanbic Bank accounted for 38.86 per cent in the period.
Dfcu Bank, Cipla, NIC and New Vision all accounted for 1 per cent for both volume and turnover.

During the same briefing, which was conducted on Zoom, USE also noted that it was in consultation with Capital Markets Authority to conclude on how companies should hold virtual Annual General Meetings.
Ms Alison Kwikiriza, the USE manager of legal and compliance, said they had sent out official market notices rescheduling the moratorium that had been placed on annual general meeting.

moketch@ug.nationmedia.com

As part of the initiatives to grow industrial use of power, electrical equipment worth $308,421 (Shs 1.1 billion) will be installed at Kamuli substation.

Power distributor Umeme will install a second transformer and associated accessories at the facility, thereby doubling the substation’s capacity. Demand on the sole transformer currently in place is over and above the manufacturer’s recommendation.

Additionally, a conservative estimate puts the annual growth in load on the substation at three per cent.

“The existing 2.5MVA transformer exhibits a 2.4 loading. This translates into 96 per cent loading, which exceeds the best practice of 80 per cent maximum loading,” reads an extract of the justification for the upgrade.

“Therefore, there is imminent risk of damage or failure of the current transformer and its protection equipment if no intervention is sought,” it adds.

The Electricity Regulatory Authority has since approved the investment and Umeme is in the course of seeking offers to carry out work on the substation. Kamuli, largely an agricultural town located 144 kilometres east of Kampala, is home to Kamuli Sugar and Kenlon Industries Uganda.

Alongside the Kamuli substation upgrade, the other projects to address industrial load growth are the Jinja West switching station, MMP Buikwe industrial park feeder upgrade, Hoima load management and Entebbe Pearl Marina bays and metering.

We could not immediately establish how much Umeme will spend on each of the other projects. Aside from building substations, the other measures intended to encourage industrial consumption of power include lowering the retail tariff for large industrial consumers.

That said, upgrade of Kamuli substation is the latest in a series of similar efforts the distributor is undertaking. In March, the utility kick-started the process on modernising Gulu, Kisubi and Ntinda substations in order to ensure the power users that draw their supply from them get stable power throughout.

Still on substations, Umeme will put up new ones in Nakawa in Kampala and Nakasamba in Entebbe, Wakiso district. Improvement of Gulu, Kisubi, Kakiri as well as the Ntinda substations and the building of new ones in Nakawa and Nakasamba will gobble Shs 29.4 billion altogether.

The new substations will ease pressure on the old ones that have been supplying the aforementioned locations. Upgrading transformers to match load as will be done in Kamuli and the use of bigger cables help in reducing technical energy losses by reducing the strain on the equipment and ensuring fewer electrons are dissipated respectively.

Stock brokers during a trading session. Fixed income markets are likely to remain the investment of choice for some time to come according to experts. Courtesy photo Uganda Securities Exchange (USE) is where publicly listed companies list a portion of their shares for the general public to invest their money by buying shares.

Equities are stocks or shares in a company. If you buy stocks, you’re buying equities. You may also get “equity” when you join a new company as an employee.

That means you are a partial owner or can be, of shares in your company. Since equities do not pay a fixed interest rate, they do not offer guaranteed income. In other words, with equities come with risk.

Uganda Securities Exchange has four quarters of trading activities on the stock exchange each financial year.
During the first quarter of 2020 (January to March 2020), research analyst at Created Capital, Mr Oscar Paul Emasu says trading turnover on the USE in Q1 2020 stood at Shs21.51 billion with a volume of 273.58 million shares.

“The market improved significantly versus Q1 2019, comparable turnover is up 143 per cent from Shs8.84 billion in Q1 2019 to Shs21.51 billion in Q1 2020,” he said.

Explaining what contributed to USE’s better performance in first quarter compared to last year, Mr Oscar says: “The trend of the improved performance in Q1 2020 started in the last quarter of 2019 where the Electricity Regulatory Authority (ERA) approved favourable performance parameters for Umeme, there was also significant liquidity on the Stanbic counter which also drove activity.”

Mr Emasu adds: “Indications of strong FY2019 financial results for several listed companies including British American Tobacco, Bank of Baroda, dfcu limited, Stanbic Uganda and Umeme boosted optimism in the period as investors positioned for attractive valuations.”

During the quarter, all sorts of investors were in the stock market comprising of retail individuals, local funds, African funds and international funds.

Mr Emasu says in quarter one, Umeme was the most preferred in the period, trading 64.07 per cent of turnover, Stanbic Uganda Holdings with 24.31 per cent and dfcu with 11.19 per cent.

The stock market was hit by Covid-19 towards the end of quarter one as most activities internally and externally affected corporate actions.
Following the outbreak of Covid-19, businesses and the general public have been encouraged to adopt a number of social distancing measures which restrict public gatherings.Consequently, the Uganda Securities Exchange also advised listed […]

Dr. James Mwangi, the Equity Group CEO and Managing Director (PHOTO/File). NAIROBI – The Board of Directors of Equity Group Holdings Plc, one of the largest bank on the Nairobi Securities Exchange by market capitalization, has withdrawn its recommendation of a Ksh. 9.5 billion dividend payout to its shareholders. The withdrawal of the dividend payout speaks to the Board’s assessment of risk, post balance sheet date of December 31, 2019 and of the Group’s approach to prudent risk mitigation and management.

The COVID-19 global health pandemic has led to a great lockdown which has induced a complex and multi-faceted global crisis of health, economic, and social challenges of an unprecedented magnitude. The pandemic’s effects have created a significant drop in the global GDP, and a substantial loss of employment leading to an economic recession which economists are projecting will evolve into a global depression worse than the Great Depression of the 1930’s.

The global economic outlook has worsened considerably since the beginning of the year. The United Kingdom has entered a severe recession last experienced in the 17th Century, while the United States unemployment rate is expected to reach 25% by the end of 2020 with 39.6 million people already unemployed. The most recent global growth projections from the International Monetary Fund (IMF) have revised the global economic outlook to below the 2.9% achieved in 2019 from an initial projection of 3.3% to -3.0% (negative 3.0%) of GDP growth rate, which they feel is optimistic. Cautiously, the IMF also projects that if the pandemic fades in the second half of 2020 and if policy actions taken around the world are effective in preventing widespread bankruptcies, extended job losses, and system-wide financial strains, global growth could rebound to 5.8% in 2021.

“The Equity Group Holdings Board took a conservative approach that recognizes the emerging unquantified risk of the pandemic and opted to preserve capital in the face of the prevailing uncertainty,” said Dr. James Mwangi, the Group CEO and Managing Director. He added that, “A strong capital and liquidity position gives us the strength and capacity to cushion our business and accommodate and walk with our customers during these challenging times”.

Further, the Board would like to encourage the Bank’s customers to seek opportunities to innovate in the age of the pandemic, and to keep looking for growth possibilities even in this trying time in order to preserve cash and capital, and to not […]

Dar es Salaam. C RDB and NBC banks have been shortlisted for Africa’s premier bankers’ awards which celebrate excellence in banking and finance on the continent.

The two Tanzanian banks are among six from the East African region that were nominated as finalists for the top honours in the African Bankers of The Year Awards for 2020. The others are Kenya’s Equity bank, Kenya Women Microfinance Bank, Absa of Uganda and East African Development Bank.

Winners in the 11-category list will be unveiled on 26 August this year during the Annual Meeting of the African Development Bank (AfDB) in Abidjan, Côte d’Ivoire. The AfDB ceremonies will, however, be clouded by the unravelling investigation on the bank’s President, Dr Akinwumi Adesina, who has been accused of corruption and abuse of office by his own staff.

Dr Adesina was expected to be re-appointed to the role for a second five-year term during the annual meeting but his fate now depends on the direction that the investigation takes.

But that investigation notwithstanding, the continent’s who is who in the financial circles will gather to cheer peers celebrated for pulling some of the mega and life changing deals in the quest for Africa’s development. The awards also recognise reforms, rapid modernisation, consolidation, integration and expansion of Africa’s banking and financial system.

In Tanzania, CRDB’s two tickets to the finals was courtesy of the Standard Gauge Railway (SGR) and the Sh6.6 trillion Rufiji Hydroelectric (Nyerere Dam) projects. The bank will compete in the Infrastructure Deal of the Year and the Energy Deal of the Year. CRDB and other local banks put together a funding mechanism for the two signature projects.

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The amount that the bank individually pumped into the two projects was not made public. Efforts yesterday to get comment from the bank’s officials were futile. However, in April this year, CRDB and United Bank for Africa (UBA) provided $737.5 million (about Sh1.7 trillion) in guarantee to the joint venture comprising Egyptian firms Arab Contractors and Elsewedy Electric for the execution of the Rufiji Hydroelectric dam project.

CRDB and NMB Banks also teamed up with the African Trade Insurance Agency (Ati) to issue guarantees for the SGR infrastructure project which aims to facelift the 1,800-km central railway line to a modern landmark.

For its part, NBC was nominated in the Small and Medium Sized (SME) Bank of The Year category which would make its maiden entry this year. NBC prides […]

The East African Cables manufacturing plant in Nairobi. The company has been making losses for the past four years. FILE PHOTO | NMG The agreement involves a restructure of the outstanding facilities by the bank under a new long term facility.

EA Cables is grappling with a huge debt portfolio amounting to Ksh3.55 billion ($35.5 million), which has eroded cash flows pushing the firm into a negative working capital position of Ksh3.27 billion ($32.7 million).

According to the firm’s 2018 annual report, it owed banks a total of Ksh3.55 billion ($35.5 million) as at December 31, 2018, of which Ksh2.56 billion ($25.6 million) was borrowed from Standard Chartered Bank Kenya and $5.32 million from Standard Chartered Bank Tanzania.

East African Cables has reached an agreement with the State Bank of Mauritius (SBM) over the restructuring of Ksh285 million ($2.85 million) debt that is due and payment on demand, giving the company a lifeline in its recovery efforts.

The agreement means the lender withdraws a liquidation petition against the firm, a Nairobi Securities Exchange-listed firm that has been making losses since 2015.

“The agreement involves a restructure of the outstanding facilities by the bank under a new long term facility and security arrangement,” said company secretary Virginia Ndunge in a public notice last week.

“The withdrawal of the petition is a significant step towards the company’s turnaround plan that includes strengthening of the balance sheet, operational improvement and having the right funding structure for growth and profitability.”

Debt portfolio

In January 2020, the firm announced that the board had been in discussion with all the lenders.

EA Cables is grappling with a huge debt portfolio amounting to Ksh3.55 billion ($35.5 million), which has eroded cash flows pushing the firm into a negative working capital position of Ksh3.27 billion ($32.7 million).

According to the firm’s 2018 annual report, it owed banks a total of Ksh3.55 billion ($35.5 million) as at December 31, 2018, of which Ksh2.56 billion ($25.6 million) was borrowed from Standard Chartered Bank Kenya and $5.32 million from Standard Chartered Bank Tanzania.Other loans included Ksh161.52 million ($1.61 million) from Ecobank Kenya Ksh285.01 million ($2.85 million) from SBM and Ksh3.82 million ($38,200) from Credit Bank Kenya Ltd.According to the report, out of the Ksh3.55 billion ($35.5 million) that was due for repayment on December 31, 2018, loans amounting to Ksh1.6 billion ($16 million) relating to Standard Chartered Bank Kenya and Standard Chartered Bank Tanzania were […]

Head, Investment Banking, Middle East and Africa, Citigroup, Mr. Miguel Azevedo has advocated a $100b fund for businesses in Africa to get the economies going and create jobs.

Speaking, yesterday, at a webinar hosted by Africa CEO Forum, Azevedo, who led the discussion, said with the impact of COVID-19 to bring businesses back in Africa in a sustainable manner, would require a functioning global economy, as de-globalisation is not good for the continent.

The forum, the second in the series of six webinars dedicated to business leaders operating in Africa was entitled, ‘Closing deals and impact of the COVID-19: What can we foresee in the pipeline.”

The webinar was attended by Partner, at MMC Asafo, Esther Omulele; the Managing Director, Centum Capital, Fred Murimi; Director, Asafo & Lawtons, Riette Engels-van Zyl; Partner, Development Partners International, Sofiane Lahmar; Group Chief Executive Officer, Emerging Africa Capital Group, Toyin Sanni and moderated by BBC journalist, Anne-Marie Dias Borges.

Azevedo called for a $100b fund for over five years in Africa, to be supported by the United States of America, Europe, and China to get the economies going and create jobs.

He also said the debt situation in Africa has to be sustainable with some elements of re-profiling and debts restructuring, which is not easy but necessary.
According to him, African countries need to implement solid economic and industrial policies that favour investments and capital expenditure.

Kenya Airways planes at the JKIA in Nairobi. FILE PHOTO | NMG The global aviation trade association has renewed its call for government to aid the industry, which is on the verge of collapse as the impact of the Covid-19 crisis deepens.

The International Air Transport Association (IATA) has said African countries, including Kenya, Ethiopia, South Africa, Nigeria and Tanzania, will be hit hardest due to severe travel restrictions that have lasted three months, costing the airlines revenues running into billions of shillings.

The association is calling for the rescue of the airlines through a mix of direct financial support, loans, loan guarantees, support for the corporate bond market and tax relief.

Kenya is expected to lose Sh168 billion in contribution to the economy and 3.5 million passengers, representing a 50 per cent reduction in passenger demand. This is expected to result in a Sh76.65 billion revenue loss while risking 193,300 jobs at the national carrier Kenya Airways (KQ) and Jomo Kenyatta International Airport (JKIA).

Ethiopia, on the other hand, is expected to lose 2.5 million passengers, resulting in a Sh45.15 billion revenue loss and risking 500,000 jobs.

Kenya had already lost Sh56.7 billion and had about 137,965 jobs affected as of April 2, the association said.

“To minimise the impact on jobs and the broader African economy it is vital that governments step up their efforts to aid the industry,” IATA said.

The new alert comes after KQ announced it will seek a government bailout after grounding its aircraft due to the ban on international flights, signalling a cut in revenue. KQ chief executive officer Allan Kilavuka said the airline is still waiting for government action.

“We are still talking with the government. In terms of time frame, it’s the Ministry of Transport and National Treasury to decide,” he said in a phone interview.

IATA is also appealing to development banks and other sources of finance to support Africa’s air transport sectors.

“Airlines in Africa are struggling for survival. Air Mauritius has entered voluntary administration, South African Airways and SA Express are in business rescue, other distressed carriers have placed staff on unpaid leave or signalled their intention to cut jobs,” it said. “More airlines will follow if urgent financial relief is not provided.”KQ has announced that top executives and employees will take a pay cut of up to 75 per cent of their gross salaries as part of mitigation measures to save the firm. The airline is […]

Kenya Airways chief executive Allan Kilavuka. FILE PHOTO | NMG Kenya Airways #ticker:KQ has not been operating cargo flights from Nairobi for the last two weeks as demand for freight and growth in capacity stiffens competition, a move that will hit the airline, which was banking on the service to supplement its income.

Chief executive Allan Kilavuka said there is increased capacity and low demand compared to before that is why the carrier has not been operating cargo flights.

At the moment, there are close to 12 cargo airlines operating from Jomo Kenyatta International Airport to different destinations in the world, a significant rise from less than five that were operational after the travel restriction brought about by Covid-19 was put in place.

“This (a lack of cargo flights) means less income and we will struggle even more than we were before,” Mr Kilavuka told the Business Daily.

“There is a lot more capacity now and demand is lower so there is less opportunity than before,” he added.

Mr Kilavuka said increased capacity had seen a drop in freight charges, meaning that it could not be profitable at the moment for KQ to operate long haul cargo flights using the passenger aircraft.

Kenya Airways does not have long-range cargo aircraft and the two B737F that the carrier owns can only do regional services and there is no too much cargo to transport intra-Africa.

The weekly capacity at the airport is now 1,800 tonnes against the volumes of 1,500 tonnes, meaning the supply has outstripped the demand.

The national carrier had started doing several cargo trips from Nairobi to Europe and Asia using passenger aircraft to generate some revenue to help the carrier meet some of its financial obligations such as paying off utility bills.

Increased capacity at the JKIA has pushed the cost of freight to Sh236 for a kilo from a high of Sh525 for the same quantity previously.

However, the cost is still high when compared to a normal period when a kilo of cargo goes for a dollar.The move comes as a boost to players in the horticulture industry who have been grappling with high charges owing to limited capacity to ferry their produce to European country.Some of the airlines flying to Nairobi at the moment include Qatar Airways, Ethiopian Airlines, Emirate Cargo, Lufthansa, Martinair, Etihad, British Airways and KLM among others.KQ reported a Sh12.9 billion loss for the financial year ended December 2019 up from […]