By VICTOR JUMA
In Summary
- KCB had targeted to cut its cost-to-income ratio to below 50 per cent this year on a leaner and more efficient workforce.
- Uganda is one of six markets in the East African region where KCB has expanded in the past decade to grow its earnings.
KCB Group has started the search for a new head of its Ugandan business after retirement of former CEO Albert Odongo.
Joram Kiarie, previously the lender’s director for
mortgages, has been acting as KCB Uganda chief executive following Mr
Odongo’s exit last month. KCB has invited candidates to apply for the
position, intending to appoint a substantive replacement in the next few
weeks.
“Albert Odongo opted to retire and pursue other
interests in the month of May,” KCB said in a statement. Mr Odongo had
served in the position since 2010.
More than six executives and directors have exited
their positions at KCB in the past two years on personal volition and
also as a result of corporate restructuring of the lender. Some of the
executives who have left the bank in the past one year are Charles
Maranga who was the HR director, Kirop Malakwen (company secretary), and
Fred Mutiso (director of audit).
KCB had targeted to cut its cost-to-income ratio to below 50 per cent this year on a leaner and more efficient workforce.
Standard Investment Bank said the bank’s
management expects the ratio of its staff costs to total income to
decline to 24.9 per cent this year, down from 28.9 per cent last year.
Uganda is one of six markets in the East African
region where KCB has expanded in the past decade to grow its earnings.
There are 26 banks operating in Uganda, including subsidiaries of
Equity, and DTB.
Uganda has presented significant growth
opportunities but also stiff competition for Kenyan lenders, with
I&M Bank being the latest local bank to announce plans of venturing
into that market.
The country is set to amend its banking laws to
allow for the introduction of agency banking, Islamic banking, and
mobile money, a move that is expected to significantly boost access to
financial services.
KCB and Equity pioneered the regional banking
strategy, with the two top lenders now focusing on consolidating their
regional units that have reduced their reliance on the Kenyan market.
KCB said the combined pre-tax profits of its
regional units rose 60 per cent to Sh2.4 billion last year compared to
Sh1.5 billion in 2012. This saw the subsidiaries contribute 11.5 per
cent of the bank’s total pre-tax earnings last year.
Uganda, Rwanda, Tanzania, and Burundi and South
Sudan have fewer banks compared to Kenya’s 43 lenders. Uptake of formal
financial services is also relatively low, signalling a significant
growth potential in the coming years amid increased economic growth.
The economies of Uganda, Tanzania, and Rwanda, for
instance, are projected to grow 6.6, 7.4, and 7.5 per cent respectively
this year, according to projections by the World Bank.
The high growth rates enhanced their appeal to
local lenders that have raised billions of shillings from shareholders
and strategic investors to fuel their outward growth.
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