Nyachae among wealthy owners of merged NCBA

Former Cabinet minister Simeon Nyachae has emerged as one of the leading shareholders of NCBA Group #ticker:NIC with 8.6 million shares worth about Sh300 million.

Mr Nyachae was among a group of prominent investors who held shares in the former CBA Group that later merged with NIC Group to form the NCBA Group, which is listed on the Nairobi Securities Exchange.

The businessman, politician, former chief secretary and former head of civil service had 3.1 million CBA shares that converted into 8.6 million shares in NCBA and whose stock is currently trading at about Sh35 on the Nairobi Securities Exchange. His stake in NCBA now stands at 0.57 percent.

He joins a group of other billionaire investors with significant stakes in the listed firm including Naushad Merali and the families of Kenya’s founding president Mzee Jomo Kenyatta and late Central Bank governor Philip Ndegwa.

Mr Muhoho Kenyatta, for instance, now holds a direct stake worth Sh400 million in NCBA. He also holds other shares in the bank indirectly alongside other members of the wider Kenyatta family whose total ownership in the lender is estimated at 13.2 percent or the equivalent of about Sh6.8 billion.

He initially held 4.2 million shares in CBA that converted into 11.5 million shares in the listed firm. His direct stake in the company now stands at 0.77 percent. Mr Muhoho, who previously served as CBA’s deputy chairman, is however, not listed in the reorganised NCBA board of directors. On the other hand, the Ndegwa family, which controlled NIC with a stake of 25 percent before the merger, was revealed to have also been one of the long-term shareholders in CBA.

James Ndegwa and his brother, Andrew Ndegwa, held 6.6 million shares in CBA that were swapped into 18.2 million shares of NCBA and which have a current market value of Sh631 million. The merger saw the Ndegwa family emerge with an NCBA stake estimated at 12 percent and valued at Sh6 billion.

Mr Merali’s ownership in the listed bank stands at 2.9 percent and is worth about Sh1.5 billion.

A circular guiding the merger of the two banks shows that the Kenyattas became shareholders in the lender after buying out Bank of America between 1984 and 1992. The Ndegwa family, through their investment vehicle, First Chartered Securities, acquired their initial 12 percent stake in NIC between 1993 and 1996 by buying shares from the lender’s previous owner, Barclays Bank of Kenya.

The merged bank, NCBA, has risen to rank as the fourth largest in terms of absolute profits after overtaking DTB Group and the local branches of Standard Chartered Bank and Barclays Bank. NCBA reported a total net profit of Sh7.7 billion in the nine months ended September. This represented a growth of 17.3 percent compared to net earnings of Sh6.5 billion the year before.

NCBA is expected to also overtake I&M Holdings #ticker:I&M and Stanbic Holdings #ticker:CFC, which will soon publish their results for the nine months ended September. NCBA did not report its results as a single unit and instead issued separate financial statements for NIC and CBA.

The Business Daily combined the two sets of results to get an indication of how the merged business performed. The new bank says that while the merger took effect on September 30, the full combination is still ongoing and will be completed in the next few months.

“The process of amalgamating the subsidiary businesses, both in Kenya and the region, and the adoption of the name NCBA and brand identity by each is currently ongoing and subject to regulatory approvals,” the company said in a statement. “This process is expected to be completed by March 31, 2020.”

In terms of total assets, NCBA rose to rank third with holdings of Sh487.8 billion which surpassed Co-op Bank’s Sh440.7 billion. KCB #ticker:KCB has the most assets at Sh764.3 billion, followed by Equity #ticker:EQTY (Sh677.1 billion).

NCBA’s profit jump in the review period was helped by higher income from transactions and reduced payouts to fixed deposit account holders. The lender’s non-interest income, for instance, surged 23.2 percent to Sh14.4 billion while interest expenses dropped 3.7 percent to Sh13.6 billion. Interest income rose 2.6 percent to Sh29.7 billion as the loan book expanded 8.1 percent to Sh248.7 billion. The lender increased its investment in government bonds and T-bills by 5.6 percent to Sh131 billion.

NCBA’s profitability is expected to rise in coming years as the merged entity cuts costs. The company said it would review areas of overlap including branch networks, technology, management and support functions with a view to cut costs and improve efficiencies.