The task ahead for new CRDB boss

Dar es Salaam. It’s now official. Mr Abdulmajid Nsekela will replace Dr Charles Kimei as CRDB Bank Plc chief executive.

The chairman of the bank’s board, Mr Ally Laay, told The Citizen on Thursday September 20 that Mr Nsekela would officially start his duties in the capacity of managing director designate on October 1.

“He will work with the current MD until May 2019 when he (Dr Kimei) officially retires,” he said.

A seasoned banker, Mr Nsekela faces the daunting task of guiding employees of Tanzania’s largest commercial bank by asset size and customer deposits towards successful implementation of CRDB’s five-year strategic plan, which runs from 2018 to 2022.

“Priority areas have been set out in the strategy. The role of the management, under the MD, is to implement the plan on a day-to-day basis,” Mr Laay said.

Mr Nsekela takes over from Dr Kimei, who is credited with overseeing CRDB’s turnaround strategy that has made the bank a runaway success story over the last two decades. Dr Kimei will officially step down next year after 21 years at the helm.

In 1998, the value of CRDB’s assets was Sh54 billion, and the figure had shot up to Sh 6 trillion by December 2017. Customer deposits increased from Sh40 billion in 1998 to Sh4.4 trillion last December, while the number of branches rose from 20 to 262.

Mr Laay showered praise on the outgoing chief executive. “Dr Kimei has done an outstanding job overseeing the bank’s growth to its current position. He has had 21 years of distinguished service, and we are very grateful to him.”

Mr Laay declined to reveal the finer details of CRDB Bank Plc’s five-year strategy that will be implemented under Mr Nsekela’s stewardship.

Mr Nsekela has rejoined CRDB at a time when commercial banks are grappling with high levels of nonperforming loans (NPLs) as clients adapt to new economic realities.

As the country’s largest bank, CRDB’s role in the economy cannot be overstated but this status has come at some cost.

By the end of last year, the ratio of CRDB’s NPLs to total loans stood at 12.7 per cent. The banking industry’s regulator, the Bank of Tanzania, recommends NPLs of not more than five per cent.

Mr Nsekela will also have to contend with declining profits that have been the trend among commercial banks for the past two years.

The banking industry registered a total of Sh426 billion in net profits during the 2014 calendar year. The amount rose to Sh438 billion in 2015, but dropped to Sh423 billion and Sh286 billion in 2016 and 2017, respectively.

In 2014, CRDB’s registered a net profit of Sh95.6 billion. Net income rose further to Sh128 billion in 2015, but crashed to Sh69.577 billion in 2016 before plunging to Sh36.2 billion last year.

Falling net profits, which are largely a result of massive provisions for possible bad loans, translate into lower dividends for shareholders.