Companies

KCB cuts staff bonuses by nearly half to Sh1 billion

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A KCB banking hall. It is Kenya’s largest bank by assets and profitability. Photo/FILE

Kenya’s largest bank KCB cut bonus pay for staff by nearly half last year, the lender’s newly published annual report shows.

KCB paid a total bonus of Sh1 billion last year, which was Sh837.2 million (44.8 per cent) less than the amount paid in 2012.

The bank’s net profit for 2012 (on which the bonus pay was based) rose 11.1 per cent to Sh12.2 billion.

While the lender has continued to register double-digit growth in earnings and remains Kenya’s largest bank by assets and profitability, it has signalled an intention to further cut down on costs, which include staff compensation.

“Going forward, key focus is on cost transformation initiatives,” KCB said in the annual report.

The bank says its cost-to-income ratio —a measure of efficiency— fell to an all-time low of 51.7 per cent last year. This was the culmination of a steady drop in the ratio from 57.4 per cent in 2012 when it started implementing cost cutting measures and a high of 68.9 per cent in 2009.

Other Nairobi Securities Exchange-listed Kenyan banks that have released their annual reports do not disclose their bonus payments, preferring to lump them together with expenses on staff salaries.

Equity’s staff costs rose the fastest last year at 26 per cent to Sh9 billion, partly attributable to the increase in its staff count to 8,000 from 7,060 in 2012.

Standard Chartered Kenya’s payroll costs rose 9.5 per cent to Sh5 billion despite the lender trimming its workforce to 1,850 from 1,903 in 2012.

Barclays had the slowest growth in staff costs among the big lenders at 3.8 per cent to Sh8.1 billion, largely driven by retrenchment that has seen the lender lay off hundreds of employees.

A total of 272 workers left Barclays last year alone, cutting its staff count to 3,829. Co-operative Bank’s remuneration costs for 2013 were not immediately available since the lender has not released its annual report.

The 2011 performance on which KCB’s Sh1.8 billion bonus pay was based marked a turning point for the bank, as it rose to the position of Kenya’s most profitable lender after overtaking Barclays.

Last year KCB’s net profit jumped 17.5 per cent to Sh14.3 billion.

The bank is emphasising a greater reliance on technology to serve customers, helping to reduce the number of staff and ultimately slow down payroll costs.

With a staff count of 6,489 last year, the Sh1 billion bonus payout amounted to an average payout of Sh158,397 per employee, slightly higher than the average monthly salary of Sh119,531.

This represented a 56 per cent drop from the average pay of Sh361,303 each of the 5,162 workers received in 2012 when a total of Sh1.8 billion was paid out. 

The 2012 bonus was more than double the average monthly salary of Sh133,756 paid out in that year, and put the payout at about 15.7 per cent of total wage costs including retirement benefits. 

READ: KCB staff bonus rises three-fold to Sh1.8 billion

Bonus payment ordinarily varies widely as it is pegged on each employee’s monthly pay, with managers and top executives earning the largest amounts due to their bigger base salaries and strategic responsibilities.

Kenya’s top banks are locked in a battle for top talent.

Executives and managers are most sough-after workers attracting lucrative perks, including stocks and bonuses.

READ: Top bank chiefs get double-digit salary increases

KCB’s overall employee costs jumped 13.5 per cent to Sh13.4 billion in tandem with growth in staff numbers to 6,489 from 5,162 in the same period. Its workforce growth came despite scores of staff leaving last year as part of a retrenchment plan that had been ongoing since 2011.

The new hiring was however largely driven by the bank’s expansion in regional markets, including Burundi and Rwanda.

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