Joshua Oigara, the long serving chief executive of East Africa’s largest Bank, KCB, exited the C-suite this week leaving a legacy of transformation, change and innovation.

In 10 years, he transformed the nature and character of the bank from a lender mainly serving large government ministries, departments and public sector clients into an innovating and true mass-market retail bank while retaining a big presence in banking large corporate, institutional and government clients.

The real test of a CEO and business leader’s performance is the results they produce over their entire tenure. The metrics for evaluation must be based on objective data — not public opinion. And in the metrics of financial intermediation, Mr Oigara hit the ground running when he took over running of the bank in January 2013.

The lender achieved spectacular growth in customer deposit accounts. Over his tenure, customer deposits would grow at a compound annual growth rate (CAGR) of 35 percent.

Data extracted from regulatory financial disclosures and Central Bank of Kenya’s bank supervision reports show that, net loans and advances growth over Oigara’s tenure grew at a CAGR of 14.5 percent easily outpacing the banking industry’s numbers — at a much lower CAGR of 8.3 percent over the same period.

KCB’s share of the industry’s loans and advances rose from 15.2 percent in 2013 to a remarkable 22.7 percent in 2020. In other words, going by analysis of the statistics from regulatory financial disclosure and reports by Central Bank’s supervision reports, KCB advances nearly one in every seven shillings in Kenya’s banking sector today.

Pre-tax profits

The advent of the rate capping law in Kenya in September 2016, hardly three years after Oigara took over the reins of the region’s largest bank presented him with major strategic challenges. Yet close analysis of the data extracted from regulatory financial disclosures and CBK reports will show that unlike its large peers in the region, Mr Oigara managed to maintain the trajectory of high customer deposits and loan growth.

The bank navigated through the adverse conditions to astutely grab market share from its peers, with customer numbers and deposit growth being achieved mainly by digital offerings, where mobile loans rose fourfold in 2019.

According to the data, mobile loans and advances grew rapidly from 2015 at a CAGR rate of 121. 6 percent to account for 25. 9 percent by value of the bank’s net loans and advances portfolio by 2021.

At Ksh154 billion ($1.3 billion), mobile loans and advances by KCB dwarf — by value — the lending portfolio of Kenya’s digital lenders put together. Today, the sheer size of KCB’s digital lending portfolio effectively positions the bank as a fin-tech in plain sight.

Judging Oigara’s tenure by looking at profit and loss performance and balance sheet metrics, the picture that emerges is of solid achievement.

New revenue streams

The bank’s pre-tax profits grew to the highest level in the bank’s history to $470 million, achieving a spectacular compound annual growth rate of 11.4 percent even after taking into account the dip in revenues and profit growth in 2020 that was occasioned by the coronavirus pandemic.

Analysis of the data will reveal that the high and steady level of pre-tax profit margins was the consequence of cost containment measures implemented by Oigara’s regime, which consistently lowered the cost-to-income ratio from 51.7 percent in 2013 to 44 percent in 2021.

As a result, KCB’s share of banking industry pre-tax profits rose from 15.2 per cent in 2013 to 22.7 per cent in 2020 — a remarkable corporate achievement.

Another picture that emerges from looking at the data covering Mr Oigara’s 10-year reign at the bank is that of prudent deployment of capital to fund investments in new revenue streams.

Unlike some of its large peer group banks, Oigara’s tenure maintained prudent dividend policies with dividends per share averaging about 40 per cent of earnings per share.

In contrast, peers over the same period shipped out profits through 100 percent dividend payouts, eroding their capital bases and denying the financing required to capitalise on opportunities in domestic and regional markets.

The prudent deployment of capital led to sustained increase of KCB’s capital and reserves. This is how Oigara was able to close high-profile mergers and acquisitions in the domestic market, where it acquired the National Bank of Kenya, and others in regional markets in Rwanda and Tanzania.

Oigara has left a legacy of exemplary personal achievement on most of the measures. As I look at the numbers, what has happened at KCB amounts to corporate alchemy.

In Oigara’s 10 years at KCB we have learnt poignant lessons on the impact of long CEO tenures and the effect of CEO turnover on performance.

Longer tenures come with experience and institutional memory. There are also lessons in managing CEO succession and planning especially in the context of transition of a star CEO.

The choice by the board of Mr Paul Russo — a long-serving insider to steer East Africa’s largest bank — is a vote for continuity.