Top bank staff get Sh591m pay rise in year of job cuts

HF Group, House head office along Kenyatta Avenue Nairobi. PHOTO | MARTIN MUKANGU | NMG 

By DAVID HERBLING

More by this Author

Summary

• The increased earnings for top managers came against the backdrop of a turbulent year for the industry, with the 10 listed banks growing their total net profit at a lower pace of 4.5 per cent to Sh83 billion.
• Bank managers earn hefty salaries and enjoy a range of benefits such as share ownership schemes, pension and gratuity schemes, membership to elite golf clubs, insurance, travel allowances, and per diem when away on official duty.
• HF Group posted the biggest growth in payroll costs for senior managers, hitting Sh282 million last year from Sh185 million

Senior managers of Nairobi Securities Exchange-listed banks earned a total pay rise of Sh591 million last year, outpacing the lenders’ profit growth and defying massive job cuts that were recorded in the industry.

Freshly published annual reports show total remuneration to senior managers at 10 publicly traded banks increased 4.9 per cent to hit Sh6.02 billion in 2016 from Sh5.7 billion a year earlier, as the firms fought to keep their top echelons happy in a tough operating environment.

Housing Finance

had its executive pay surge 52 per cent, Co-op Bank (30.1 per cent), DTB (16 per cent), National Bank (14.5 per cent), Barclays (8.8 per cent), StanChart (7.03 per cent), and Equity Group’s

4.03 per cent.

The increased earnings for top managers came against the backdrop of a turbulent year for the industry, with the 10 listed banks growing their total net profit at a lower pace of 4.5 per cent to Sh83 billion.

Three lenders, namely NIC Bank

, KCB and Stanbic Kenya

, reported a Sh310.7 million cut in their total executive wage bill.

Banks last year reduced lending to small and mid-sized enterprises in favour of government securities, attributing the strategic shift to the passage of a law in September that capped interest rates on loans at four percentage points above the central bank’s signal rate, currently at 10 per cent.

The lenders cited the interest rates cap as their reason for having shed more than 1,000 jobs in the year through massive retrenchment, apparently to cut costs.

Attractive benefits

Bank managers earn hefty salaries and enjoy a range of benefits such as share ownership schemes, pension and gratuity schemes, membership to elite golf clubs, insurance, travel allowances, and per diem when away on official duty.

Their increased pay was in tandem with the 13 per cent rise in top bank shareholders’ dividend payout to Sh34.7 billion, compared to Sh30.8 billion in 2015.

At Barclays Kenya, top performing senior bank managers with at least three years of service were last year rewarded with Sh70 million worth of shares in the Johannesburg Stock Exchange-listed Barclays Africa, the parent firm.

“Qualifying participants are entitled to Barclays Africa Group Ltd ordinary shares either by way of a share award or a cash award that must be used to purchase Barclays Africa ordinary shares,” the bank says in its latest annual report.

I&M Bank’s latest annual report does not disclose key management pay, which was recorded at Sh69 million in 2015. The lender declined to respond to our queries on last year’s data.

HF Group posted the biggest growth in payroll costs for senior managers, hitting Sh282 million last year from Sh185 million.

Frank Ireri, the group CEO, attributed this to salary increases, bonuses and an expanded base of senior executives, with the creation of a new mortgage finance company and other divisions after the firm transformed into a non-operating holding company.

“The increase is due to salary increase and bonus payment in year 2016 for group and subsidiaries senior management team,” Mr Ireri said in an interview.

“A new mortgage finance company (HFC) was created and licensed in August 2015. Hence full-year effect of HFC new exco [executive committee] members in 2016 as compared to 2015 where the P&L [profit and loss] impact was only for five months. There were new exco members at HFC: risk, finance, treasury, operations, branch business, customer service, and legal.”

READ: HF borrows Sh1.5bn to repay corporate bond in October

ALSO READ: Housing Finance profit 24pc down on reduced sales

KCB, Kenya’s biggest bank by assets, saw pay to top managers decline 15.6 per cent to Sh427 million in 2016 compared to Sh506 million a year earlier.

“The decline is attributed to changes in the management structure following the adoption of group as holding company and Kenya as subsidiary business during the period and the impact of devaluation of South Sudan currency on group overall business,” the lender said in response to our queries.

Stanbic Kenya, whose pay to top managers tanked 48.6 per cent, was yet to respond to our queries by the time of going to press.

The lender, controlled 60 per cent by South Africa’s Standard Bank, paid senior bosses Sh233 million in 2016 down from Sh453 million in 2015.

NIC Bank’s key management pay  dropped 4.7 per cent to Sh236 million in 2016 after the lender sent home 32 senior managers home in November last year as a strategy to cut operating costs.