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.