Companies

Banking CEOs’ bonus millions revealed

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Co-operative Bank CEO Gideon Muriuki. He earned the largest bonus of Sh266.4 million, cementing his position as Kenya’s highest-paid banking executive. FILE PHOTO | NMG

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Summary

  • Bonuses for chief executives of Kenya’s listed banks rose by Sh46.9 million last year to reach Sh364.8 million in the wake of record banking profits.
  • The bonus pot increased from Sh317.9 million in 2020 when the cash incentive was slashed significantly from the pre-pandemic high of Sh593.1 million in 2019 as banks looked to preserve cash at the height of the pandemic.
  • The bonus payouts came in a year when most banks reported record profits besides having built surplus capital as costs for loan defaults fell and lenders resumed lending.

Bonuses for chief executives of Kenya’s listed banks rose by Sh46.9 million last year to reach Sh364.8 million in the wake of record banking profits that also delivered outsize shareholder payouts.

Some lenders maintained a freeze on payouts while others reinstated or expanded the cash rewards as the sector recovered from the Covid-19 led economic slowdown of 2020.

The bonus pot increased from Sh317.9 million in 2020 when the cash incentive was slashed significantly from the pre-pandemic high of Sh593.1 million in 2019 as banks looked to preserve cash at the height of the pandemic.

The bonus payouts came in a year when most banks reported record profits besides having built surplus capital as costs for loan defaults fell and lenders resumed lending.

The performance pay looks set to rise further should KCB Group #ticker:KCB disclose a resumption of executive bonus pay for its chief executive, Joshua Oigara.

The country’s second-largest bank had not yet published its annual report by the time of going to press, but it saw its profit jump 74 percent last year to Sh34.2 billion.

Co-op Bank’s #ticker:COOP Gideon Muriuki earned the largest bonus of Sh266.4 million, cementing his position as Kenya’s highest-paid banking executive.

Absa Bank Kenya #ticker:ABSA , Standard Chartered Bank Kenya #ticker:SCBK , Co-op Bank, and Stanbic Holdings #ticker:SBIC raised bonuses for their leaders in the year ended December on the back of record profits.

The nine listed lenders nearly tripled their dividend payout for the 2021 financial year from Sh18.8 billion in 2020 to Sh51.7 billion.

Only a few of the executives received a bonus larger than their 2019 award, indicating that banks are wary of expanding remuneration for their leaders by a large margin in an environment where the earnings boom is largely attributed to a substantial reduction in loan loss provisions.

Equity Group #ticker:EQTY suspended its bonus while DTB Group #ticker:DTK and NCBA Group #ticker:NCBA continued with the freeze of the cash incentives despite growing their earnings and raising dividend payouts to shareholders.

Absa’s Jeremy Awori had the biggest bonus increase of Sh23 million among the Nairobi Securities Exchange #ticker:NSE -listed banks that have made their pay disclosures. He was paid Sh40.6 million in the review period compared to Sh17.5 million in 2020.

The new bonus is slightly below the pre-pandemic payout of Sh41.2 million he received in 2019. Absa’s net profit more than doubled to Sh10.8 billion last year, a performance that saw it reinstate dividends of Sh1.1 per share.

The bank benefited from reduced credit impairment and the absence of rebranding costs, with its return on net assets improving to 19 percent.

Stanchart’s Kariuki Ngari was second as his bonus increased by Sh19.9 million in the review period when the bank delivered strong earnings growth and a record dividend.

He was paid Sh47.9 million, up from Sh27.9 million in 2020. The new bonus is slightly higher than the Sh45.9 million he received in 2019.

Stanchart’s net profit jumped by two-thirds to Sh9 billion last year, helped by lowers costs and higher non-interest income.

The bank is set to pay a cumulative dividend of Sh19 per share or a total of Sh7.1 billion –a record for the institution for the lender which is also the most generous with a distribution of 80 percent of net income.

Mr Muriuki of Co-op came in third after his bonus was raised by Sh6 million to Sh266.4 million from Sh260.3 million in 2020.

The new bonus is smaller than the Sh271 million cash incentive he received in 2019.

Mr Muriuki’s relatively large compensation has its roots in his long tenure besides being credited for growing Co-op Bank to rank among the country’s largest lenders by earnings and assets.

His performance was further burnished in the Covid era when Co-op Bank distinguished itself as the only lender to maintain dividends of Sh1 per share while making acquisitions and eschewing job cuts, winning him the EMEA Finance magazine’s 2021 Africa CEO of the Year award.

Co-op Bank’s net profit increased 53 percent to Sh16.5 billion in the year ended December on the back of higher interest income from lending and investment in government fixed-income securities. The lender maintained its dividend payout at Sh1 per share.

Equity’s James Mwangi missed out on a bonus despite the bank posting a record net income of Sh40 billion last year and declaring a peak dividend of Sh3 per share.

Mr Mwangi, however, earns substantial gratuity, which dropped to Sh42.1 million in the review period compared to Sh194.5 million in 2020.

I&M Group’s #ticker:IMH Sarit Shah’s bonus dropped to Sh4.9 million last year from Sh7.3 million in 2020 as the bank’s net income rose 2.5 percent to Sh8.6 billion, bucking the trend of earnings boom seen among its rivals.

Stanbic Holdings for the first time revealed a partial bonus of Sh4.7 million for its chief executive Patrick Mweheire, who receives some of his compensation from the parent firm Standard Bank of South Africa.

His exact bonus is unclear.

DTB’s Nasim Devji and NCBA’s John Gachora continued to miss bonuses even as their banks reported higher earnings and dividends.

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