Diversification key agenda as new NBK chief takes charge

A former Standard Chartered Bank top executive will on Wednesday take the helm of National Bank with the brief to diversify the bank and return it to profit growth.

Munir Ahmed will assume the role of managing director following the retirement of Reuben Marambii who is believed to have proceeded on leave pending his retirement in December.

Mr Ahmed’s short-term goal will be to return NBK to profit growth after its quarter one earnings remained static at Sh486 million, paling in comparison to the double-digit growth posted by its peers.

He is also expected to reduce NBK’s reliance on consumer lending, which accounts for nearly 85 per cent of its loan book, with a focus on corporate lending, investment banking and insurance to support its future growth.

“We want to diversify the operations of NBK to take it to another level and offer higher returns to investors,” said Mohammed Hassan, the chairman of the bank in an earlier interview.

The bank signalled its intention to hire expatriates and Kenyans in the diaspora after it placed the job search advertisement in The Economist magazine.
The bank has hinged its performance on consumer lending and this has seen its rivals like Co-op Bank and Equity race ahead of it in recent years, thanks to their diversification of businesses.

NBK had lent Sh25.5 billion or 88.5 per cent of its Sh28.8 billion loan book to individuals while its peer NIC Bank had lent 6.7 per cent of its Sh56.6 billion loan book to retail consumers.

Banks such as Equity have tapped Kenyans in the diaspora in the race for a larger share of the corporate lending market that is dominated by big banks like Barclays, KCB and Standard Chartered.

The hiring of executives from international banks is in line with its plan to replicate their business model in what could raise the stakes in the lending market.

This informed NBK’s move to widen the search.

Mr Munir has worked at Standard Chartered Bank for the last 16 years, mainly in South Africa, where he was director in charge of regional transaction banking for Africa’s operation.

In the three months to March, NBK made before tax profit of Sh486 million compared to Sh467 million a year earlier while its loans book remained static at Sh28.4 billion from Sh28 billion in December.

First dividend

Mr Marambii took the helm in 1998 from John Simba — who was executive chairman — with the approval of the then Finance minister Simeon Nyachae to turn around the bank that was on the brink of collapse under the weight of bad debts.

Mr Marambii was tapped from Central Bank of Kenya where he was the chief manager of banking and was instrumental in returning NBK to the profit territory, which culminated in the bank paying its first dividend in 12 years in 2010.