PHOTO | FILE National Bank vice-chairperson Sylvia Kitonga (left) and
managing director Munir Sheikh Ahmed during the bank’s half-year results
briefing on August 6, 2013.
NATION MEDIA GROUP
He has a bullish ambition to awaken a
sleeping giant that faltered years back. This is no mean task for the
head of the National Bank of Kenya that was at one time one of the top
three banks in the country.
But Mr Munir Ahmed, who
has been at the helm for a year now, says he does not need a miracle to
turn around the bank because some of his competitors have been there and
done it.
About 10 years ago, Equity Bank was little known. Now, it is a top tier institution commanding the largest market share in customer numbers in the country. A little over six years ago, Cooperative Bank was smaller than National Bank, but it is now one of the top three.
“When I joined the banking industry about 18 years ago, it (NBK) was one of the top three banks in Kenya. Now we are at about number 12,” he said.
And the fact that it is not top-tier any more worries him. “It is mid-tier,” he says. In fact, it is in the middle of the mid-tier segment, which is not a good position to be.
“It would be a shame if it were to continue on the decline that it has been on for the past 20 or so years,” he noted.
So, in five years, Mr Ahmed would like to propel National Bank to the rank of the top five banks in Kenya.
ISLAMIC BANKING
In
April, the bank established an Islamic banking unit as part of its
turnaround strategy. It also plans to venture into the regional markets
of Somalia, Tanzania, Uganda, and South Sudan upon execution of a rights
issue next year meant to raise Sh10 billion.
In the next two years, it plans to open 20 branches to clock a total branch network of 80 across the country.
In the next two years, it plans to open 20 branches to clock a total branch network of 80 across the country.
Ongoing
diversification to the corporate and small medium enterprise segment is
set to reduce reliance on the traditional retail segment that is
susceptible to interest rate shocks that have in the past hurt the
bank’s earnings.
In the 2012 financial year, the bank reported a 53 per cent decline in after-tax profit to Sh729.8 million from Sh1.5 billion in 2011 due to high interest rates that pushed up interest expenses by more than 165 per cent to Sh3.6 billion.
Loans and advances to the largely retail customers in the period remained unchanged at Sh28.35 billion, but customer deposits dropped 2.5 per cent to Sh55.2 billion.
In the first half of this year, the bank’s profits rose by 15 per cent. “I think we have the right strategy. It now boils down to execution,” Mr Ahmed said in an interview.
“We stumbled, picked ourselves up and
dusted ourselves off and put together a strategy. We believe five years
is long enough to run back to the front where we were. So, it is the
time for the sleeping giant to wake up and start moving,” he said of the
stock market-listed bank.
Competition is relentless —
from shylocks offering instant loans to telecoms baying for a bigger
slice of the banks’ revenues and fellow commercial banks and other
financial institutions in the same market.
But Mr
Ahmed believes the best way to compete on that front is to use the same
telcoms to distribute banking services in what he describes as “flipping
the same challenge back”.
In the first week at work
following his appointment last year, he asked to meet all the bank’s
division heads — retail, credit, corporate banking, and treasury. To his
surprise, there was none. Everything was being run in a back office. So
he created these positions.
“Reorganisation of a
sleeping giant means a lot of people have been sleeping in that system.
So, it involves waking people up and making them believe and own that
strategy,” he said.
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