Kenya Commercial Bank’s CEO, Dr Martin Oduor-Otieno, explains how his bank supports continental business and provides a wide range of financial services to its two million customers
“We are committed to making a difference in the lives of all our stakeholders,” says Oduor-Otieno, CEO of Kenya Commercial Bank (KCB). “Once we have confirmed expansion outside East Africa, we will be formally communicated here. Our plan is to position the bank as a significant Pan-African player with the capacity to support African business and boost the integration of our various common markets.”
Established in 1896 along the Eastern coastline, KCB is the region’s largest bank in terms of operational branches by the numbers on its balance sheet, and over time, has grown from a simple setup to a world-class operation. It provides access to services to a wide-reaching number of people across Kenya, and has also built a strong presence in Tanzania, South Sudan, (a subsidiary with 20 branches), Uganda, and Rwanda. In May, KCB opened its most recent addition in Burundi. This has completed the East African circuit, and with a strong presence in each Eastern country, the bank has secured a continental reach.
KCB has experienced an impressive surge of growth in both volume of business and infrastructure in recent years, owing in part to its popularity in the market, but also its unique position as Kenya’s regional bank. 226 branches are found across the east African region. In Kenya we have 170 branches; in Tanzania 11; South Sudan 19; in Rwanda we have 10; and in Uganda we have 16. Over 3,600 agents administer services to two million clients in three key customer groups: retail, corporate and the micro banking segment; KCB is fast becoming a worthy contender on international markets. “The bank operates on a one-banking platform; therefore all KCB branches in the six markets in which we operate are networked, and customers can transact at any branch as if it were their home branch,” says Oduor-Otieno. “Our customers are assured of a seamless facilitation of their international trade requirements: we offer technology-driven products that allow customers to execute business in the comfort of their homes and offices, and we also have a 24-hour contact centre that caters for our East Africa diaspora market.”
Owned by East Africans
KCB has been consistent in its turnover, and has slowly established itself as a lucrative organisation since 2004. 2011 was a landmark year: the bank reported a KSh15.1bn ($179.3m) profit. Over the years, the Kenyan government has reduced its shareholdings in KCB to 17.74 percent, down from 100 percent. Divestiture began in earnest in 1988, and this has had an interesting effect on the bank and its clients. “Since then, the government offloads its shares at the stock market by opting out on the rights issue, so KCB shares are now cross listed at the Uganda Securities Exchange, the Dar Es Salaam Stock Exchange in Tanzania, and the Rwandan Over the Market Stock Exchange,” says Oduor-Otieno. “This will allow them to be accessed in all the markets that we operate in with ease, and make KCB truly owned by East Africans.”
As a regional bank, KCB says it is “committed to working with other stakeholders to boost the region’s capacity to conduct trade among members.” It is now also providing an improved information technology platform that facilitates online, real time one-branch banking, fast transmission of payments and provides customers with easy access to funds.
The bank provides a wide range of banking and financial services, from corporate banking and trade finance products through to propositions for fledging small and medium enterprises (SMEs) and individual clients, to mortgage, finance and credit card facilities.
There are a vast number of personal products available, including current and savings accounts. KCB is also proud of its ability to offer banking products that can meet a diversified range of criteria, from individual business needs and investment options.
KCB recently reported an upsurge of 49 percent in mortgage lending in the last year, with standout successes in Rwanda, Uganda and Tanzania. Oduor-Otieno thinks the figures are down to the real estate sector playing a vital role in the continent’s economic infrastructure. “KCB S&L Mortgages currently control about 40 percent market shares on existing mortgages in Kenya and the services have an important job where we have launched our mortgages services, namely in Kenya, Uganda, South Sudan and Tanzania,” he says. “In all these markets, there is a need for housing and therefore KCB is taking its expertise in the Kenyan market and the large balance sheet to support the construction industry to these newer markets. A large amount of infrastructural development has also opened up areas to construction and housing development and the strong need for low cost housing.”
The bank also achieved a 35 percent profit increase in the first quarter of 2012, over 2011 figures for the same time period. Oduor-Otieno says the bank hopes to emulate this success over the rest of the year, and into 2013, by sustaining profit growth. “KCB has implemented its ‘Transformation Initiatives’ for the past 12 months, and our subsidiary markets are returning substantial profits as a result. We hope this will continue as we progress into the fourth quarter,” he says.
“We continue to roll out innovative products and services to boost our revenue streams. These are related to products that are internet or mobile phone enabled. Recently, we launched ‘KCB East African Diaspora Banking’, targeting East African nationals working outside their home countries to transact and invest through KCB.” The bank has also taken one step further in helping its business customers by introducing the Biashara Club, where customers can access value-adding commodities with the aim to have the opportunity to take small and medium-sized businesses further.
Giving back to the community
The KCB Foundation, a charitable trust set up in 2007, is one of the key ways the bank contributes to society, and so far has distributed close to KSh500m ($5.9m) to support community projects and needs in five thematic areas that also complement the company’s millennium development goals. Led by a board of directors, the bank ensures the foundation achieves its vision to be a responsible and responsive regional provider to social development in the immediate Kenyan region, by identifying the most urgent and pressing needs of its various communities, and tries to find appropriate resolutions for their needs.
“In KCB, the East African community and regional businesses have a partner to provide the required resources and infrastructure that spurs economic development and opens up opportunities for people,” says Oduor-Otieno. “The support is for environment, education, enterprise development, health and humanitarian intervention, and we work with employees and other stakeholders across the region. The bank also contributes one percent of its annual profit to contribute to the foundation annually.”
KCB also has a modern training and hospitality centre in Nairobi called the Leadership Centre, which offers training to KCB employees. The bank has high hopes for this venture, and a recently adopted online training plan that all staff can access, as an alternative option to physical training at the facility, and is proving popular. The centre is also hired out to corporate initiatives.
KCB’s mission statement is “to grow our existing business while building the platform to be the preferred financial solutions provider in Africa with global reach.” The company is being true to its word and is ensuring internationalisation is a key factor in its growth. It is moving up to new markets; Congo is a definite consideration for investment, and the bank is scaling up its regional operations as it moves into 2013. It aims to drive productivity in the region and improve the overall quality of customer service, despite satisfaction already being high. When it comes to recapitalisation, it’s hoped that planned strategic partnerships will contribute to growing profit margins, and growing the lucrative mortgage business across the region will remain a top priority.