On Wednesday, Mr Joshua Oigara handed over the reins at the Kenya Commercial Bank Group, marking an end to a near 10-year tenure that has transformed the bank into East Africa’s leading retail, SME and corporate bank.
The real test of a CEO and business leader’s performance is the results they produce over their entire tenure. And, the metrics for evaluation must be based on objective data.
In Mr Oigara’s case, his performance at KCB is clear to see in such metrics such as growth in customer deposits, number of loan accounts, trends on non-performing loans, and expansion of the branch network. One can also look at digital banking metrics, including the growth of the KCB-M-Pesa brand.
Alternatively, one can choose to judge by looking at profit and loss performance and balance sheet metrics.
Also, KCB’s performance on stock market (growth in a total shareholder return- including dividends reinvested, change in market capitalisation and so on) in the years since his 2013 appointment provides a good basis for performance evaluation.
As we all know, the most important reason for holding a banking licence is to engage in financial intermediation. In the nine years of his tenure, customer deposits tripled- from Sh305 billion to Sh837.1trillion.
In the period, loan advances tripled from Sh227 billion to Sh675.4 billion, the number of branches doubled from 237 to 492- the number of agents grew four fold, while customer numbers grew 11 times from 2.5 million in 2013 to 25 million in 2021. Today, 40 per cent of all deposit accounts in the market are at KCB.
Clearly, Mr Oigara has left behind a legacy of exemplary achievement on most of the measures. He took a stolid slow lumbering bank and transformed it into a nimble mass-market retail bank but which also retained and grew big institutional clients.
Profitability and stock performance
Today, the duties and responsibilities of a bank CEO is far more complex than it was 10 years. The role goes way beyond running a bank to managing board relationships and periodically interacting with regulators. Then there is investors whose focus is always on the next quarter results.
Yes, profitability is important. Let us now turn to judging Oigara’s tenure against balance sheet metrics and stock market performance and returns.
The data shows that profit before tax more than doubled- from Sh20.1 billion in 2013 to Sh47 billion in 2021, total income more than doubled, from Sh47 billion in 2013 to Sh109 billion in 2021, while shareholder equity tripled from Sh63 billion in 2013 to Sh171.7 billion in 2021.
Earning per share also doubled. During the period the company has consistently paid dividends that cumulatively amount to Sh71 billion.
How about market share? A comparative analysis of the banking sector by the Central Bank of Kenya as at October 31, 2020 ranked KCB first out of 39 institutions operating in the country with a market share index of 14.4 percent.
The company’s market share was 14.2 percent, 15.3 percent and 13.2 percent in terms of total net assets, gross deposits, and shareholder funds respectively. The bank is categorised under the large peer group of lenders with a market share index of more than five percent.
Although the government has over the years substantially reduced its shareholding in KCB to 17.5 percent, it remains the largest single shareholder and has always managed to appoint all directors by out-voting the rest at each annual general meeting of the company.
Besides the data and numbers, Mr oigara’s performance can be evaluated in other leadership aspects.
As the CEO of the largest bank in the economy, it can as no surprise that he was also expected to take leadership roles on pressing economic issues of the day.
Turnaround artist?
It was Mr Oigara that the State turned to and tasked with spearheading the project of turning around the National Bank of Kenya. It should not be forgotten that several past attempts to change the fortunes of the bank through expensively State-funded bailouts had yielded zilch.
Although the turnaround project is still work in progress, Mr Oigara has left behind the National Bank of Kenya on the path to recovery.
And when the crisis at both Imperial Bank and Chase Bank hit, Mr Oigara found himself involved in seeking a solution and accepting to perform a mandate way beyond making profits for his shareholders.
As the CEO of the largest bank in the region, one is always on the rudder of external forces, demanding customers, savvy competitors, profit-hungry investors, and political and economic headwinds. On top of that, there is a regulator that increasingly paying more attention to issues around governance and reputation risks.
Every step or misstep one makes happens on a much more public stage than it did in the past, fanned by social media and the non-stop news cycle.
Poignant lessons
As Mr Oigara approached the exit door, he found himself in the middle of what turned out to be a vicious misinformation campaign where he was accused of bending the rules to favour a politically- exposed customer and top government officials.
A letter that was widely circulated in the media allegedly signed by Oigara purportedly queried an irregular swift transfer amounting to Sh 314 million.
Then there was a video circulating in the social media that alleged that Mr Oigara, in collaboration with a politically- influential director of the bank, had helped a politically exposed person launder over Sh2 billion within a period of one year.
There was an anonymous letter, dated May 24, 2020 addressed to the governor of the Central Bank of Kenya alleging that Mr Oigara was looting shareholders money by paying himself irregular and inflated bonuses.
I managed to access a target inspection audit report by the Central Bank of Kenya that investigated all these allegations against Mr Oigara. Signed by the director of bank supervision, Mr Gerald Nyaoma, the audit found that there was no evidence to support those allegations.
In Mr Oigara’s years at KCB we have learnt poignant lessons on the impact of long CEO tenures and the effect of CEO turnover on performance.
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Note: The results are not exact but very close to the actual.
