Banking CEOs’ Salaries Skyrocket as Profits Surge in Kenya

by | Apr 18, 2023 | Banking, News | 0 comments

Top executives in the banking industry in Kenya are seeing an increase in their pay, with Equity Group CEO James Mwangi and NCBA Group CEO John Gachora earning a combined Sh362.37 million last year in salary and bonuses. This news comes after double-digit growth in profits in the banking industry in Kenya last year.

Regulatory filings show that Mr. Mwangi’s earnings jumped by 49 percent to Sh213.64 million, including a Sh53 million bonus, after missing out on incentive pay in 2021. Similarly, Mr. Gachora received an 87.7 percent pay rise to Sh147.73 million, including a bonus of Sh40 million, after missing performance-linked rewards for two years in a row.

Equity and NCBA Bank

The profit boom in the banking industry, which saw Equity post a 15 percent rise in profits to Sh46.1 billion and NCBA Group’s profits rise 35 percent to Sh13.78 billion, has prompted another year of dividend windfall for investors. Banks such as KCB, Equity, Absa Kenya, and Standard Chartered Bank Kenya that had cut or frozen payouts in 2020 due to Covid-19 disruptions have resumed or increased payouts from last year.

Cooperative Bank of Kenya, KCB Group, and Standard Chartered Kenya are also expected to join in the bonus bonanza for CEOs, with their profits having risen by 33 percent, 19.5 percent, and 38 percent, respectively.

Many banks have built surplus capital after taking a cash-preservation stance in 2020 and 2021, which saw them freeze or cut dividend payouts to shareholders and skip bonuses to executives as profits fell. However, increased profits in the banking industry have set the stage for bonus payments to bank executives in a sector known to pay higher rewards to top managers.

The remuneration policies of many banks provide for performance-based pay, where the board sets targets for the CEO and other executive directors and then pays a bonus when this is achieved or exceeded. The bonus is in addition to the fixed pay, pension, and other benefits.

With the increased pay and bonuses for CEOs in listed banks, the payout looks set to topple their pre-pandemic year when performance rewards jumped 94 percent to reach Sh615.97 million. In 2020, most executives had reduced or zero bonuses in the wake of Covid-19 economic hardships, which triggered losses, layoffs, and business closures.

Banks in Kenya last year benefited from increased growth in interest income as they stepped up the pace of lending in line with the continued recovery of economic activities. Increased lending and upward review of loan prices have helped lenders book more interest income, while aggressive loan recoveries have saved them from the sharp elevation of loan defaults.

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