They are out this afternoon. The share price facing down. Any predictions?

Happiness is not a right - except for children. You won't be happy if you think too much. The search of happiness is one cause os sorrow.

1st Qtr is up 29%. Not so bad for a diehard shareholders. However considering that the comparison is done basing on 1st Qtr 08 which experienced a lot of challenges. Therefore the results can be said to be dismal or worse declined in comparison to last Qtr...The price will definately head south au sio!

The results are OK but dissapointing. I expect the results to be interpreted that Equity has now come to the end of its super rapid growth phase. All along that has been the reason why it has commanded a much higher PE than other banks. Note that Equity has now been overtaken from being the fastest growing among the listed banks by banks such as Diamond Trust which grew their PAT by 36% in Q1 against Equity's 26%.

The growth trajectory may slow even further if not dissapear altogether in the 2nd Qtr given the very huge contribution of the Safaricom IPO to Equity's Q208 results. I would expect Equity to trade at a lower PE within a range of 10 to 13 under the current economic conditions down from 14,although ocassional speculative pressures could push it to 15 but this can now not be sustained for long.


Opportunity calls but few respond.

29% growth largely in an economy that grew by 1.7%!! As an investor I'm happy else we expect miracles!

The loan loss provision is going raise a lot of eye brows.

Hapo iko maneno,less provision on loan loss when the loaned amounts have grown.....mmmmh!!!.....clearly they want the profits to look higher!!!!!

The chief value of money lies in the fact that one lives in a world in which it is overestimated.

Ngwono,Eli and other prayerful brethren are needed here. I counted 6 eminent commentators out of 11- who are clueless in reading financial statements!
1stly,the A in accounts stands for the 4 types of accounts that make up the financial statement. A balance sheet,Profit and Loss acc,Cash Flow Statement and the less well know shareholder movements. Please learn what they all do.
Suffice to say that non-performing loans (NPL) are a balance sheet item. They are therefore cumulative over time reducing or increasing. CBK has specific rules around when a loan can be declared as an NPL. I believe this after 90 days of non-payment. A non-performing loan is still a loan. It’s just that it’s not doing what its supposed i.e. being reduced at a given time.

The loan loss provision is a P&L item and is therefore not cumulative. It reflects the fact that there is no chance a bank will recover an NPL. There are specific rules around when you can take a LLP hit in your P&L mainly to do with probability of recovering the loan. Its therefore possible to have Ksh10bn of npl and not take a hit on a given quarter based on your assessment of all the various loan that make up this Ksh1obn
Equity took a Ksh1bn hit in ’08 to reflect the fact that out of its Ksh2.7bn npls,the probability of recovering Ksh1bn is very low. For the other Ksh1.7bn,it clearly deems that they are still recoverable.

Saying all that,I expected 40% growth in Q1 and probably 20% in Q2. These are the two quarters it benefited from Safcom…

www.mjengakenya.blogspot.com

Change of subject? Errm-you missed my explanation below by a mile.

Never mind. Enjoy your weekend...


www.mjengakenya.blogspot.com

@ Mainat,

Banks traditionally increase LLP to reduce their profits & hence deny the tax man his dues for a rainy day; check all Q1 published results from baks. The term provision is used because they are actually 'providing' for losses emanating from bad loans. if a loan becomes hardcore then its written off and expensed as such (bad loans written off). I actually need a good explanation from an insider on what their finance guys were upto.

The good thing is that they are now looking to expand outside the country a they might have realised the Kenyan market is slowly creeping into the plateau phase.

Any bank whose net income goes up by more than 15% this quarter will raise a red flag on my radar.

I read in one of the dailies recently that:

Interviews with players revealed that Equity Bank appears to be the only major bank with enough liquidity to lend to others.

http://www.nation.co.ke/magazines/smartcompany
/-/1226/602816/-/satbs5z/-/index.html


The thicker the thigh the sweeter the pie.