KCB bets big on youth to grow profits

The appointment of Joshua Nyamweya Oigara as Chief Executive Kenya’s biggest bank—KCB— came with a tinge of surprise to many operatives of the financial services sector.

Surprising because Mr Oigara is not an industry insider, having become a banker only last year and in a dramatic fashion.

KCB’s headhunting of Mr Oigara set it at loggerheads with Bamburi Cement where he worked as finance director, sparking a battle that the bank only used its big muscles to win in November 2011.

It has turned out that KCB was not merely looking for someone to take care of its massive pile of cash but a replacement for outgoing Chief Executive Martin Oduor-Otieno, who is stepping down in April next year.

The succession planning formally came to a close on Thursday with the formal announcement that Mr Oigara will take charge of Kenya’s biggest bank at 37.

The appointment effectively makes him the youngest leader of a publicly traded bank. Executives of all other lenders listed at the Nairobi Securities Exchange are over 40.

The change of guard comes at a time when KCB has grown to become Kenya’s largest bank in terms of profitability and asset base, an achievement that has been underpinned by the aggressive regional expansion strategy it adopted in the past five years under Mr Oduor-Otieno.

Mr Oigara is expected to take the bank — which is strong in both corporate and retail banking — to the next level riding on expansion into new business lines such as investment and diaspora banking that his predecessor has identified as growth areas.

KCB’s change of guard comes just weeks after rivals Barclays-Kenya and National Bank of Kenya (NBK) hired new CEOs from subsidiaries of London-based Standard Chartered Plc.

Mr Oigara’s only banking experience is the one year he has served as CFO at KCB but the company’s board expressed confidence in the management skills he has acquired over the years in the corporate world.

The bank had stated that it was looking for a person who had managed a company with an asset base of over Sh297 billion but the chair of KCB board Musa Ndeto insisted Mr Oigara had met the demands of the advertisement.

“He has had that experience here in the last year that he has been with us and also from where he came,” said Mr Ndeto. “We were looking for a CEO and not a banker; someone to manage the group.”

Mr Oigara has a four-year contract in the new position. Mr Ndeto said Mr Oduor-Otieno will also exit the bank’s board and his position will be filled by Mr Oigara’s replacement in the CFO position.

On growth path

Mr Oigara has worked for business advisory firm PriceWaterhouseCoopers in Kenya, Bidco Oil Refineries, and regional subsidiaries of global cement giant Lafarge, including Bamburi and Uganda-based Hima Cement.

He holds an MBA from Edith Cowan University (ECU) in Australia and has a Bachelor of Commerce (Accounting) degree from the University of Nairobi.

KCB said Mr Oigara’s experience puts him in good stead to lead Kenya’s largest bank to the next phase of growth.

The framing of the advertisement for the chief executive’s position had given the impression that was KCB looking for professionals working outside Kenya or an insider because KCB is the only Kenyan company with an asset base that meets the set threshold.

Some pundits had gone further to name John Gachora, a Kenyan working in South Africa as the MD of Barclays Africa’s corporate and investment banking arm, as one of the few candidates who met the requirement.

KCB also said it was keen on growing into a strong international bank and the new CEO would be expected to drive the international banking agenda besides growing the existing regional corporate and retail business. Candidates were also expected to have the ability to co-ordinate KCB’s international banking business.

KCB is counting on Mr Oigara’s skills to put it on the growth path at a time when its rivals are also banking on their new CEOs to craft and implement new strategies that will help them grow their market share.

When Mr Oduor-Otieno took over as CEO in 2007, KCB posted a Sh2.9 billion net profit on a total asset base of Sh120.4 billion.

By the end of last year, the bank’s asset base had expanded to Sh330.7 billion and its profitability had more than tripled to Sh10.9 billion— making KCB Kenya’s most profitable lender and East Africa’s biggest bank.

In September, KCB nearly matched its 2011 full year profit having posted Sh9.3 billion as its total assets rose by Sh40.9 billion to Sh371.6 billion.

Read as a signal

That performance has been helped by the bank’s regional expansion strategy into which it has invested billions of shillings.

KCB has a presence in Tanzania, Uganda, Rwanda, South Sudan and most recently in Burundi.

KCB’s rival NBK recently appointed a former Standard Chartered executive Munir Ahmed as CEO to replace Reuben Marambii.

Mr Munir has worked at Standard Chartered Bank for 16 years, including in South Africa, where he was director in charge of regional transaction banking for Africa operations.

His appointment to head the bank was read as a signal that NBK is keen to diversify from consumer lending, which accounts for 85 per cent of its loan book, to corporate lending, investment banking and insurance to support its future growth.

Barclays Bank of Kenya this week appointed a former Standard Chartered executive Jeremy Awori as CEO to take over from Adan Mohamed, who has been promoted as Barclays Plc’s chief administrative officer in Africa.

Mr Awori was until his appointment the managing director of Standard Chartered, Tanzania.

This story was first published in Business Daily on November 30, 2012