New National Bank boss bets on SMEs for growth
What you need to know:
- National Bank has launched a dedicated business division targeting SMEs backed by a Sh2 billion revolving fund.
The new National Bank of Kenya chief executive Wilfred Musau is counting on increased lending to small and medium size enterprises (SMEs) to grow returns for the troubled lender and steer it back to profitability.
The State-owned lender on Thursday launched a dedicated business division targeting SMEs backed by a Sh2 billion revolving fund.
“We are looking at a massive and aggressive account opening campaign for our small enterprise banking segment while at the same time becoming the go-to-bank for the unbanked and low-end customers,” said Mr Musau who prior to his appointment was the bank’s director for retail and premium banking.
Some of the products launched under the new unit include Jenga Chama (targeting investment groups), Jenga Kilimo (targeting small holder farmers) and Jenga Biashara (targeting SMEs).
“We will offer the products through our 85 branches and our mobile banking channels,” he said. Mr Musau was appointed to the helm of the bank for a five-year term effective Monday.
He has been acting CEO of the lender since April following the acrimonious sacking of Munir Sheikh Ahmed.
NBK is faced with tough times marked by declining earnings, capital inadequacy, mounting bad loans, and corporate governance queries. The bank’s net profit for the half year to June tumbled to Sh311.2 million from Sh1.7 billion in 2015.
The volume of bad loans more than quadrupled to Sh27.3 billion in the period under review.
On Thursday, the new executive remained cagey about specific plans to improve fortunes. “(Our strategy) is stabilisation, consolidation and moving towards our vision through various initiatives that we have embarked on,” Mr Musau told the Business Daily, adding that capital raising plans and efforts to unlock a rights issue stalemate were on course.
NBK’s total capital to total risk-weighted assets ratio stood at 13.2 per cent as at June 2016, which is 1.3 percentage points below the Central Bank of Kenya statutory minimum of 14.5 per cent.
“The journey to capitalise the bank is in the process for both tier one capital and tier two capital so that we can lend much more and attain tier one bank status with regard to our balance sheet and also tangible assets,” he said.
The capital ratio constraints have been compounded by a three-year impasse on a planned Sh13 billion rights issue.
