Dialectic Africa Analyst

Dear Africa Interested Individuals:                                                         In the past two years, some banks across Africa have undergone restructuring and adopted a holding company structure with the approval of their shareholders.  This new structure is supposed to be an asset to these banks and allow them to continue their strategy of being diversified business groups across the African banking space while dominating other banks that are not holding companies and have to stick to core banking and closely related activities.   How are these holding companies faring across the continent and in comparison to banks without the holding company structure?  Is being diversified dazzling the income statement or damaging it?  Let us find out. SBM Holdings Mauritius (Adopted holding company model less than a year ago) SBM Holdings (SBMH) PBT margin for H1 2015 is 20.9% .   Net income declined 55% year-on-year to MUR 607m, largely due to an unforeseen impairmen

Dear Africa Interested Individuals:                                                         In continuation from yesterday' article, most African banks have increased their asset base over the first six months of 2015 despite the difficult business environment across the continent.  If the markets are largely efficient (some are not,) African banks should not be able to manipulate their share prices.  Based on this logical expectation, I decided to directly compare what banks have control over (assets) and what they do not (market value.)  Banks want both indicators to move in the upward direction.  The reference date for assets and market value is June 30th, 2015 .  The figure for FNB Botswana is annual while the others are half-year figures.  The banks are arranged in order from the bank with the least market value relative to its assets to the most market value relative to its assets.  The countries covered are Malawi, Ghana, Zimbabwe, Kenya, Nigeria, South Africa, Ugan

Dear Africa Interested Individuals:                                                         When it comes to banking it is all about  size (more so in Africa with so many untapped or under-tapped opportunities.)  Banks in Africa keep striving to grow their balance sheets and intimidate customers to bank with them courtesy of their branch network and financial muscle.   As their assets increase, are their prices also increasing?  How do African stock markets in 2015 feel about banks growing in size?  Are the markets euphoric or subdued as African banks keep growing in size?  I picked sixteen (16) popular sub-Sahara Africa banks ( with December fiscal year ends ) across five countries in my quest to find out from the markets their view on banks growing their balance sheets in 2015.   Price reference date is August 31st, 2015 and for assets it is June 30th, 2015 all relative to 12/31/14.   I picked four banks from Kenya and Nigeria each, three from South Africa & Ghana

Dear Africa Interested Individuals:                                                          Brazil and Nigeria: similar experiences and different macroeconomic approaches                                                           Brazil is the largest economy and oil exporter in South America.  Brazil is also the most populous nation in South America.  Nigeria wears the same three crowns for the continent of Africa.  Both countries held presidential elections five months apart: Brazil in October 2014 and Nigeria in March 2015.  Both countries also had a candidate going for reelection; the Nigerian candidate lost while the Brazilian candidate won with a 3% margin which is one of the tightest elections in Brazil's electoral history.   Brazil's currency (Real) is now at its lowest official level since 2003; Nigeria's currency (Naira) achieved its lowest official level in February 2015.  Inflation in both countries is at the same level: 9.2% in Nigeria and 9.25% i

Dear Africa Interested Individuals:                                                         Let us take a look at how the largest bank (Ecobank) and the oldest bank in Ghana (SCB) are doing as at June 30th, 2015 in a concise fashion.   Ecobank Ghana is going all out to increase its earnings and make a profit.  The bank has pitched its tent with lending given the high lending rate environment in Ghana and reduced its exposure to non-lending business areas.  Interest income weighting relative to gross earnings is at 71% which is interestingly enough, less than that of SCB Ghana at 78%.  SCB increased its exposure to investment securities to offset its high NPL ratio negative impact on the income statement while Ecobank reduced its exposure to investment securities to increase its profit where it believes it has a comparative advantage and good lending opportunities despite the tough business climate in Ghana.   Ecobank Ghana has given out 92% of its deposits as net loans; th

Dear Africa Interested Individuals:                                                         Let us talk about GT Bank's H1 2015 performance concisely.   GT Bank is still committed (by its actions) to relying on lending to drive its earnings unlike its peers.  74% of its gross earnings emanated from interest income and 26% from non-interest income.  Other income is only 49% of net interest income pre-impairment.  Despite the difficult lending environment, the bank is still reliant and succeeding in generating interest income while still being cautious and understanding of the difficult operating environment.   Net loans to customers rose by less than 2% over the first six months of 2015.  Loans to assets have decreased from 54% - 51% during H1 2015 though still ahead of its peers.  The bank has done the best in terms of fresh lending during H1 2015 as 87% of new loans are reflected as performing.  This has helped the bank to achieve loan value-added of + 0.81%  when other

Dear Africa Interested Individuals:                                                         Access Bank Group has just released its half-year 2015 cumulative result.  Find below my major observations and summarized conclusion.   I commend Access Bank for the detail provided in how the bank runs its business.   As I have mentioned in the past banks are free to determine which loans in their portfolio are deemed to have been impaired.  The policy of Access Bank ( in my opinion) makes it harder for loans to be classified as impaired even after the borrower has defaulted on payments.  Non-performing loans ratio came in at 2% and non-performing loans are just 1.1% of total assets.  This is commendable.  My statement is not as a result of the improving asset quality which is also low on an absolute basis.  You will understand better once I am done.   The auditing firm did not provide an "identification assurance' to the financial statement in my opinion.  The opinion