One on One With the National Bank of Kenya CEO, Mr. Wilfred Musau

1. This is your first full financial year since you took over the reins as the CEO. You have had a bag of mixed fortunes. Whereas, the results show a positive trajectory there has been the issue of NPL’s growth amongst others. What is your strategy to firmly put the bank on the course and rebuild its image?

We are on a consolidation phase and the full year results are a demonstrable evidence the business strategy is gaining momentum in the envisaged, positive direction. Our focus is hinged on the following:

• To strengthen the operations and policies of the bank
• Taking comfortable risk and secure bank assets and resources
• Provide powerful leadership for enhanced shareholder value and returns
• Responsiveness to market, regulatory and environmental needs
• Develop and leverage on strong strategic partnerships
• Be more efficient
• Build strong relationships with all our stakeholders
• Innovate and grow to our ambition of tier one league

2. There was a recent media report that the bank is about to seal a loan deal worth over Kshs 4 billion with a majority shareholder. Could you elaborate on that and what could it mean to minority shareholders?

The loan does not affect the ordinary shareholding structure. The injection of Tier II capital through subordinated debt will boost the bank’s total capital position and improve value for shareholders and returns

3. What picture is the cash flow statement presenting that will affect the bank’s liquidity position? Will the Sh4.4 billion be enough to address the bank liquidity and capital challenges?

 With the Tier II capital injection, the bank will be able to meet minimum regulatory requirements. At the same time, the discussions with principal shareholders continue for additional share capital to enable the bank to meet its long-term business objectives.

4. Does that mean the Rights Issue proposal as a means of raising capital is off the table?

The discussions with principal shareholders continue to find ways to unlock the capital structure and this option is still open to enable Bank progress additional capital for long-term growth

5. Does the bank have enough assets diversification on its balance sheet that can be quickly converted to cash?

Yes, the liquid assets were at 30% against a regulatory requirement of 20%

6. How much customer deposits does the bank hold at the moment?

We closed the year at 97B and we forecast continued growth in-line with our funding strategy

7. In the wake of the government capped commercial lending rates, banks have looking to build new revenue streams through various means. What is National Bank’s strategy around the capped lending rates?

• Diversified to business lines like BANCA, Custody and Fund management
• Increased play in the innovation space to grow Non-Funded Income and new products
• Improved service levels and efficiency

8.What are the current loan loss provisions?

In 2016, loan provisions dropped by 27% to 2.6B (3.7B in 2015) as bank tightened loan administration, remedial and recovery measures

9. What has the bank done with regards to its credit policy which came under scrutiny in the past financial year

A revised credit policy has been implemented, appropriate, additional resources deployed, and oversight/enforcement strengthened