Dec 4, 2022

Mawazo Writing Africa

Writing about the main

Joshua Oigara’s stellar tenure headlines change of guard at KCB Group

Joshua Oigara, the longtime chief executive of East Africa’s largest bank, KCB, left the C-suite this week, leaving behind a legacy of transformation, change and innovation.

< p class="align--justify">In 10 years he transformed the nature and character of the bank from a lender primarily serving large government departments, departments and public sector clients to an innovative and genuine mass market retail bank while he maintained a major presence in banking with large corporate, institutional and government clients.

The real test of a CEO’s and general manager’s performance is the results they achieve during their achieve throughout tenure. The benchmarks must be based on objective data – not public opinion. And in terms of financial intermediation, Mr. Oigara hit the ground running by taking charge of the bank in January 2013.

The lender achieved spectacular growth in customer deposit accounts . During his tenure, customer deposits grew at a compound annual growth rate (CAGR) of 35%.

Data from the Central Bank of Kenya’s regulatory financial disclosures and banking supervision reports shows that the Net loan and credit growth during Oigara’s tenure has grown at a CAGR of 14.5 percent, far outpacing the banking industry’s figures – at a much lower CAGR of 8.3 percent over the same period.

KCB’s share of the industry’s credit and lending increased from 15.2 percent in 2013 to a remarkable 22.7 percent in 2020. In other words, after analyzing the Statistics from the Central Bank’s regulatory financial disclosures and regulatory reports reports put the KCB ahead of nearly one in seven shillings in the Kenyan banking sector today.

Profits before taxes

The introduction of the interest rate cap law in Kenya in September 2016, barely three years after Oigara took over the reins of the region’s largest bank, presented him with major strategic challenges. Yet a close analysis of data extracted from regulatory financials and CBK reports will show that unlike its major peers in the region, Mr. Oigara has managed to stay on course for high customer deposits and loan growth.

The bank navigated the adverse environment to gain market share from its rivals, with subscriber numbers and deposit growth driven primarily by digital offerings, with mobile lending growing fourfold in 2019.

According to the data, mobile credit and lending grew rapidly at a CAGR rate of 121.6 percent starting in 2015, accounting for 25.9 percent of the bank’s net loan and lending portfolio by value by 2021 At Ksh 154 billion (USD 1.3 billion), KCB mobile loans and advances make up the loan portfolio of Kenya’s digital lenders by value in the shadows. Today, the sheer size of KCB’s digital loan portfolio effectively positions the bank as a fin-tech in the public eye.

Judge Oigara’s tenure based on P&L performance and balance Hand metrics paint a solid picture.

New Revenue Streams

The Bank Before Taxes Profits soared to the highest level in the bank’s history to $470 million and achieved a spectacular compound annual growth rate of 11.4 percent, even after accounting for the decline in revenue and profit growth in 2020 caused by the coronavirus pandemic.

Analysis of the data will show that the high and consistent level of pre-tax profit margins was the result of cost containment measures implemented by Oigara’s regime, which reduced the cost/income ratio The ratio has been consistently reduced from 51.7 percent in 2013 to 44 percent in 2021.

As ​​a result, K CB’s share of the banking industry’s pre-tax profit increased from 15.2 percent in 2013 to 22.7 percent in 2020 – a remarkable company performance.

Another picture that emerges from looking at the data, which shows the 10-year Covering Mr. Oigara’s tenure at the Bank are those of the prudent use of capital to fund investments in new revenue streams.

Unlike some of its large peers, Oigara maintained during contributed a prudent dividend policy during his tenure, with dividends per share averaging about 40% of earnings per share.

By contrast, competitors have spent 100% of dividend payouts over the same period , erosion of their capital base and displacement prudent use of capital resulted in a sustained increase in KCB’s capital and reserves. This allowed Oigara to complete high-profile mergers and acquisitions in the domestic market, where it acquired the National Bank of Kenya and others in regional markets in Rwanda and Tanzania.

Oigara has at leave a legacy of exemplary personal achievement in most actions. Looking at the numbers, what happened at KCB amounts to corporate alchemy.

In Oigara’s 10 years at KCB, we have poignant lessons about the impact of long tenure Lessons learned as CEO and the impact of CEO change on performance.

Longer tenures are associated with experience and institutional memory. There are also lessons in managing CEO succession and planning, particularly in the context of transitioning a star CEO.

The board’s election of Mr. Paul Russo – a longtime insider, around the largest bank Leading East Africa – is a vote for continuity.