Although Post Bank is a tier-two financial institution, at the end of 2019, the bank had a network of 43 branches across the country and 14 mobile banking vans.
It serves nearly 1 million customers, of whom 56,000 are borrowers and 25% of the entire lending portfolio dedicated to agriculture.
Compared to tier-one commercial banks, with assets of Shs 491 billion, Post Bank was at the end of 2019 larger than 12 of the 26 tier 1 commercial banks. With a Shs 267.1 billion loan book and deposits of Shs 348 billion, if we were to benchmark against tier 1 commercial banks, that would make Post Bank the 12th largest by lending and 15th by deposits.
But perhaps even more important, while unlike most of the tier-one commercial banks that go for the top-end of the market, Post Bank which by its very setting, is a socially-oriented bank, has been able to bank the lower end of the market and remain profitable at the same time. In 2019, it made Shs 8.4 billion in profits, making it more profitable than 15 commercial banks.
And yet, according to the Auditor General’s report, and at least going by the Return on Assets (ROA) measure, this is below the bank’s potential.
According to the Auditor General’s report Parliament for the financial year ended 30th June 2020, Post Bank in December 2019, returned a ROA of 2.84% (three times more than the 0.92% in 2018) below the 5% that the Government chief auditor says is the generally accepted level for efficient companies.
It is therefore not surprising that government, which is the 100% shareholder, decided the bank was long overdue for reforming and restructuring.
This followed the sweeping exits of the top management in May 2019 that saw the Managing Director and 7 top executives fired from the bank.
In October 2019, Julius Kakeeto, an experienced banker, who had just turned around Orient Bank, nearly doubling its assets and reversing its losses, was tapped by the board to lead this turnaround.
His appointment followed an intense search exercise led by KPMG.
Following his hiring, a consultant, True North Africa, was hired to review the entire business- its operations and how it could be re organised to deliver better on its mandate.
Following the review, it was recommended that the bank needed to restructure itself holistically.
“Amongst the recommendations of the review, was that, for the bank to achieve its aspirations and move forward, it needed to restructure itself. This would involve, retaining some roles, scrapping others as well as merging some and creating new ones altogether,” Kakeeto says.
With the review and the restructuring also came a new strategy, aligned to the bank’s core mandate of being the country’s foremost financially inclusive financial services institution.
To bring alive the strategy, the board and management adopted a new vision — “being a pacesetter in transforming lives and livelihoods” and a new mission— “offering affordable and sustainable financial services that drive financial inclusion for socio-economic development.”
It was also agreed that to best deliver on its mandate, Post Bank would work towards becoming a tier-one commercial bank within 5 years.
To become a tier-one bank, certainly required the right people in the right places and that meant that the bank would have to look outside itself to attract people, especially at the top, who would lead this audacious agenda.
“We are at the tail end of the process, and we should conclude by the end of this month. We will have a full line-up of the new structure of the bank. “We’ve got a lot of seasoned experienced people. If you look at the profile of our senior management team, it is as good as most commercial banks. It is a very competitive team,” Kakeeto said.
He also says some talent from the old Post Bank management has been retained, but even, they too had to fend off tough competition from within and outside the bank.
Those retained at the Exco level are Judy Namanda Kikonyogo the Chief HR and Administration Officer, who has worked for Post Bank since 2013.
Justine Tumuheki Wabwire, the Chief Legal Officer and Company Secretary who has been with Post Bank for the last 10 years was also retained.
Meet the new team of Post Bank elite bankers
Andrew Kabeera, the No.2 at Pos tBank was hired from dfcu Bank to take up the executive director and chief operating officer role.
Ssenyange Peter, current Chief Finance Officer, joined Post Bank in June 2020, from United Bank for Africa Plc, where he was CFO for over 4 years.
Andrew Agaba, in April 2020 left Orient Bank, where he was the Head of Retail and SME Banking to join Kakeeto’s team, as the Chief Business Officer.
Martin Mugisha, is the latest entrant to Post Bank’s 7-man Exco, having joined this January as the Chief Risk Officer. He previously worked with Ecobank Uganda as the Head of Credit Risk.
Several other members of the senior management team, have also been hired from other tier-one banks such as Standard Chartered Bank, KCB Bank Uganda, dfcu Bank, Bank of Africa, Orient Bank etc.”
“Our people strategy is focused on feeding our 5-year strategic ambition to become a fully-fledged tier-one commercial bank. The people we have brought in have come with a lot of expertise in terms of risk management, we needed help there; in terms of portfolio management, IT skills- we had to do a lot of work around our ICT especially on IT security, processes etc,” explains Kakeeto.
Over and above a locked and loaded team, the bank also, this January, had its board, fully constituted further buttressing its governance and decision-making machine.
Andrew Otengo Owiny an experienced corporate and investment banker, with over 32 years of hands-on experience was appointed to chair the Board. The
The board is now chaired by investment banker and corporate finance expert, Andrew Otengo Owiny. The Wharton School, MBA (Finance & Accounting) graduate, brings onboard investment banking, corporate finance/financial & investment advisory and capital markets experience from the USA, Europe and Africa.
Owiny was appointed together with Farida Mukasa Kasujja, a banker and Francis Onebe, an audit, accounting and taxation expert to join complement Beatrice Amongi Lagada, Lawrence Kasenge, Julius Kakeeto, Andrew Kabeera and Justine Tumuheki Wabwire, whose board terms were still running.
Doing more for less
The bank is also modernising and expanding its fleet of fintech solutions, to match customer needs, but also create a matching experience with other tier-one and private sector banks.
For example, Post Bank has ordered new and smarter ATMs that take deposits and credit client accounts in real-time. To run the ATMs, a new banking switch and core system are also being upgraded.
“We have revamped our distribution channels. We are availing more cards-. We launched Union Pay international card and we are revamping our ATMs to become faster and do more. We have enabled mobile phone banking- the mobile app is up and running and can do several transactions. The USSD code for *263# is running and with that, you can do a number of transactions such as checking your balance statements, internal payments, mobile money and so forth,” Kakeeto says.
The bank has also rolled out a multi-lingual contact centre, that can support customers remotely, 6 days a week in five languages. Soon, there are plans to make the centre operate 24-7.
As a result, he says, they have reduced overcrowding in the banking halls.
“A year ago, over 90% of our customers relied on over-the-counter transactions, but that has been reduced to 60%- meaning that over 30% are now reliant on digital channels,” he says adding: “This is all aimed at becoming more efficient and we are starting to see it in the bottom line.”
Kakeeto says that when the financials for 2020, which are pending approval from the central bank do come out, shareholders and customers alike will be pleased to see the reduced cost of operations. This is regardless of all the investments made in such a short time to better the customer experience.
This gives us a very solid foundation to build on and take the bank to the next level. The growth has been quite fast-paced, Our transformation journey is just starting,” says Kakeeto.
Explaining more about the efficiencies, Andrew Kabeera says that for example, Post Bank used to have two executive directors, but the roles have been merged into one- yet the new Executive Director doesn’t own the combined salary of both.
“Our thought process, our philosophy has been, how do you achieve more with less? How do we keep our eyes on the prize without literally bursting the bank? In fact, in some cases, we have found cheaper people who can even do more. What we’re going through is a process of trying to cut excess fat, get more agile and dynamic and that never comes without pain- but it is sweet pain,” says Kabeera.
On why more capital is necessary and now, Kabeera says that although Post Bank is sufficiently capitalised by regulatory standards, for the bank to adequately meet its mandate, as enshrined in the National Development III plan, more Capitalisation is needed.
“We are well capitalised to meet the Financial Institutions’ Act (FIA 2004) requirements for a commercial bank, which Shs. 25 billion in capital. In fact, our capital is Shs. 100 billion, but given our key role in the NDP, it would be more helpful if we can have more capital from our shareholder, which is government,” he says.