National Bank of Kenya enters new phase in transformation strategy

National Bank of Kenya Managing Director and chief executive officer (CEO), Mr. Munir Sheikh Ahmed, has today laid out details of the next phase in the bank’s rapid transformation strategy, including a raft of actions the bank will take in the next six months aimed at delivering rapid growth to the bank’s loan book, profitability and customer deposits.

With the bank focused to be among the top 5 most profitable banks in 2017, Mr. Munir announced plans to liquidate 12 of the bank’s real assets/ properties around the country seeking to realize about Ks1.2B, in a new phase of the transformation streak.

Shareholders have further requested the authorizing authority to approve the bank’s planned rights issue at the AGM and have already approved the proposed strategic action. “We are waiting for our rights issue, approved by our AGM in 2013, but our shareholders have in the meantime approved the sale of low earning buildings owned by the bank,” Mr Munir said. “The buildings sale, will not affect our operation and they account for only 12% of the total branch network. The bank which currently leases 88% of its branch buildings will now be leasing all its branches except the Head Office.”

Institutional changes implemented at the bank have been bearing fruits. Since commencing the transformation plan, National bank has seen its assets grow an astronomical Ksh 55B (35% in 2 years); from Ksh 68B in 2012 to Ksh 123B in 2014.  Growth of bank assets was nearly stagnant before 2012, when the new management took over.

“The bank transformation journey is on course. We have achieved excellently the goals of the foundation phase in our strategy. Besides modernizing our information technology, increasing access to the bank services through innovative mobile, web and agency delivery platforms, we have rationalized our human assets and increased their capacity through training to deliver to the bank a team with the right attitude for growth,” said Mr. Munir.

According to Munir, a champion of transformational leadership, the new proposal to sell off its branches and lease branches instead was consistent with international the best practice in financial services:  “There is no reason for a well-run bank to own buildings. We are in the business of owning financial assets and not Real Assets. As a bank, we will generate more income from financial assets rather than from owning low earning buildings and this also explains why leading banks in Kenya and around the world prefer to lease their branches and in most cases their Head-Offices.”

The move is also in compliance with the Banking Act of Kenya which restricts the amount of real assets a bank is allowed to hold.

National Bank’s Operating Profits grew at 45% CAGR (from 1.15b in 2012 to 2.43b in 2014). In Q1 2015 the Trading Profit grew 20% Year on Year. In addition to a successful rebranding exercise, National bank has grown its brick and mortar presence countrywide with over 25 new branches, and invested in 40 off site ATMs while introducing Internet and Mobile Banking. The restructuring of its operations also saw the bank embark on a Ksh1B Voluntary Early Retirement (VER) program for redundant employees which had addressed productivity, improving the Cost Income ratio.

National bank projects increased profitability and growth this year, on the back of growing goodwill from its customers and Kenyans on the back of the new brand and transformation.