One on one with National Bank of Kenya (NBK) Chief Executive Officer Wilfred Musau.
- This is your second financial year since you took over the reins as the CEO. You have had a bag of mixed fortunes. Whereas, the results show positive remarkable changes 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?
The 2016-2017 financial year results demonstrate that the business strategy is gaining momentum in the much anticipated, positive direction. Our focus is centered on:
- Strengthening the bank operations and policies.
- Taking up comfortable risks and secure bank assets and resources.
- Provision of powerful,efficient and effective leadership for enhanced shareholder value and returns.
- Responsiveness to market, regulatory and environmental needs.
- Developing and leveraging in strong strategic partnerships.
- Increased efficiency throughout the Bank Branches and Departments.
- Building strong relationships with all our stakeholders.
- Innovate and grow to our ambition of tier one league.
- Last year, there was a media report that the bank was about to seal a loan deal worth over Kshs 4 billion with a majority shareholder. Could you elaborate on that and what it meant to minority shareholders?
The loan did not affect the ordinary shareholding structure. The injection of Tier II capital through subordinated debt boosted the bank’s total capital position and improved value for shareholders and returns.
- What picture was the cash flow statement presenting that will affect the bank’s liquidity position? Was the Sh4.4 billion be enough to address the bank liquidity and capital challenges?
With the Tier II capital injection, the bank was 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.
- Did that mean the Rights Issue proposal as a means of raising capital was 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.
- 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%
- How much customer deposits does the bank hold at the moment?
Customer deposits grew 1% from KES 93.8bn to KES 94.2bn and we forecast continued growth in-line with our funding strategy. This is on account of customer confidence in the bank and new products such as NatConnect , Diaspora banking and improved client service.
- 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.
- What are the current loan loss provisions?
In 2017, loan provisions dropped from KES 2.4bn to KES 0.7bn benefiting from reduction in NPL book as the bank tightened loan administration, remedial and recovery measures.
- 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. There has been an improved credit management system ensuring minimum negative migration
