Joshua Oigara’s stellar tenure leads the changing of the guard at KCB
The long-serving CEO of East Africa’s largest bank, KCB, Joshua Oigara, exited Group C this week leaving a legacy of transformation, change and innovation.
Within 10 years, he has transformed the nature and character of the bank from a lender serving mainly government ministries, large departments and public sector clients to an innovative and true mass market retail bank while retaining a significant presence in banking to large corporate, institutional and government clients.
The true test of CEO and business leader performance is the results they produce throughout their tenure. Rating metrics should be based on objective data – not public opinion. And in brokerage metrics, Uyjara got his start on the ground when he took over the bank in January 2013.
The lender has achieved impressive growth in customer deposit accounts. During his tenure, customer deposits will grow at a compound annual growth rate (CAGR) of 35 percent.
Data from regulatory financial disclosures and Banking Supervision reports of the Central Bank of Kenya show that net loans and advances grew during the Uyjara tenure at a compound annual growth rate of 14.5 per cent, easily outstripping banking industry figures – at a compound annual growth rate well below the 8.3 per cent over the same rate. a period.
The CBK’s share in the industry’s loans and advances increased from 15.2 percent in 2013 to 22.7 percent in 2020. In other words, by analyzing the statistics from the regulatory financial disclosure and reports from the CBK’s supervision reports, the CBK advances nearly by One in every seven shillings is in the Kenyan banking sector today.
Earnings before taxes
Kenya’s September 2016 interest rate setting act, nearly three years after Oygara took the reins of the region’s largest bank, presented it with significant strategic challenges. However, a careful analysis of data extracted from regulatory financial disclosures and CBK reports will show that unlike his big peers in the region, Mr. Oijara has been able to keep a track of high customer deposits and loan growth.
The bank weathered the adverse conditions to cleverly grab market share from its peers, the growth in customer numbers and deposits came mainly through digital offerings, with mobile loans up fourfold in 2019.
According to the data, mobile loans and advances grew rapidly from 2015 at a compound annual growth rate of 121.6 percent to constitute 25.9 percent of the bank’s net loan and advances portfolio value by 2021.
Worth Ksh 154 billion ($1.3 billion), mobile loans and advances have been pooled by KCB trolls – by value – the lending portfolio of Kenya’s digital lenders. Today, the sheer size of KCB’s digital lending portfolio effectively positions the bank as a financial technology in plain sight.
Judging by the Uigara period by looking at P&L performance and balance sheet metrics, the picture that emerges is solid achievement.
New sources of revenue
The bank’s pre-tax earnings grew to the highest level in the bank’s history to reach $470 million, achieving an impressive compound annual growth rate of 11.4 percent even after taking into account the decline in revenue and profit growth in 2020 due to the Corona virus pandemic. .
Analysis of the data will reveal that the high and consistent level of pre-tax profit margins was a result of the cost containment measures implemented by the Uyjara system, which consistently reduced the cost-to-income ratio from 51.7 percent in 2013 to 44 percent in 2021.
As a result, KCB’s share of the banking industry’s pre-tax profit rose from 15.2% in 2013 to 22.7% in 2020 – an impressive achievement for companies.
Another picture that emerges by looking at the data covering Oijara’s ten-year tenure at the bank is the judicious deployment of capital to finance investments in new revenue streams.
Unlike some of the group’s large peer banks, Oigara’s tenure has maintained prudent dividend policies with average earnings per share averaging about 40 percent of earnings per share.
In contrast, counterparties over the same period have been charging profits through 100 percent dividends, eroding their capital bases and depriving them of the funding needed to take advantage of opportunities in the local and regional markets.
The judicious deployment of capital has led to a steady increase in the capital and reserves of the Central Bank of Kuwait. This is how Oigara was able to close high-profile M&A deals in the local market, acquiring the Kenya National Bank, and other regional markets in Rwanda and Tanzania.
Oigara has left a legacy of exemplary personal accomplishments in most measures. When I look at the numbers, what happened at KCB amounts to company chemistry.
During our 10 years at Oigara at KCB, we learned moving lessons about the impact of long CEO tenures and the effect of CEO turnover on performance.
Longer periods come with experience and institutional memory. There are also lessons in CEO succession management and planning especially in the context of a distinguished CEO transition.
The selection of Paul Russo’s board – who has long served to direct East Africa’s largest bank – is a vote on continuity.