Equity in search for new MD to turn-around struggling Uganda unit

Corporate News

 

Equity Bank chief executive James Mwangi during a briefing at the lender’s Upper Hill offices in Nairobi July 30, 2014. PHOTO|DIANA NGILA 

By MUGAMBI MUTEGI

In Summary

The new appointee will replace Francis C.G Mills who left the position in May this year, having headed the business since August 2010.

Equity Bank has started the search for a new managing director of its Ugandan subsidiary in a fresh bid to turn around a business that has experienced a tough six years since being set up.

The lender, which last week announced a 21 per cent jump in half-year profits to Sh7.66 billion, has advertised for the position of MD for its Ugandan unit after departure of the previous office holder. The new appointee will replace Francis C.G Mills who left the position in May this year, having headed the business since August 2010.

Apollo Njoroge, Equity Uganda’s executive director, has since been appointed as the acting MD pending the appointment of a substantive boss.

“Mr Mills left in May after serving requisite notice and the board accepted his resignation in April as he wanted to pursue other interests,” said James Mwangi, Equity Bank’s chief executive.

“We are looking for the best person for the job irrespective of where they come from. We have published local and global adverts.”

The incoming MD will be taking over a business unit of 31 branches, which in the year to December 2013 saw its profit-before-tax drop to Sh52 million from Sh57 million the previous year.

The Ugandan unit posted a pre-tax profit of Sh19 million in 2011 while in 2010 and 2009, it had posted losses of Sh798 million and Sh266 million respectively, a pointer to the rough patch the lender is experiencing in the market. In the six months to June 2014, the Ugandan unit contributed 3.7 per cent to the group’s Sh22.33 billion revenue or Sh826.2 million.

“….the role will provide overall day-to-day strategic guidance, direction and leadership to senior management team and oversee the bank’s operations,” said Equity in a notice. “(The new MD will) prepare and direct implementation of the bank’s annual business plan and ensures that the bank attaints its objectives as cost-effectively and efficiently as possible.”

Kenyan banks that have expanded into the region have had a tough time cashing in on their investments, with many of them posting successive losses. Last year, four of the nine Kenyan banks operating in Uganda reported losses. The banks that found the going tough include NIC, Commercial Bank of Africa (CBA), Bank of Africa (BOA) and Imperial.

Other Kenyan banks operating in Uganda are KCB, DTB, ABC and Guaranty Bank, formerly Fina Bank. The Central Bank of Kenya (CBK) recently attributed this performance to Uganda’s competitive market dominated by established local players.

“Four of the subsidiaries that registered losses before tax were operating in Uganda, indicating stiff competition,” said CBK in its annual 2013 Bank Supervision Report released in June.

The International Monetary Fund has in the past warned Kenyan banks expanding into the region that common market risks in the different countries could put pressure on the parent companies as they diverted resources to sustain the subsidiaries.