NBK enters a new phase in the bank’s transformation strategy

Managing Director and chief executive officer (CEO) of National Bank of Kenya, Mr. Munir Sheikh Ahmed

NAIROBI, KENYA: National Bank of Kenya on Monday 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. 

Managing Director and chief executive officer (CEO), Mr. Munir Sheikh Ahmed announced plans to liquidate 12 of the bank’s real assets around the country seeking to realize about Sh1.2 billion in a new phase of the transformation streak.

Shareholders have further requested the authorising 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 per cent of the total branch network. The bank which currently leases 88 per cent of its branch buildings will now be leasing all its branches except the Head Office.”

Since commencing the transformation plan, National bank has seen its assets grow an astronomical Sh 55 billion from Sh68 billion in 2012 to Sh123 billion 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, 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 per cent CAGR (from 1.15b in 2012 to 2.43b in 2014). In Q1 2015 the Trading Profit grew 20 per cent 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 Sh1 billion 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.