The world is reeling from vagaries of the Covid-19 pandemic that has distracted the social-economic fabric of households, companies and countries. The International Monetary Fund (IMF) has projected the worst global recession.
In the banking sector, the financial engine of development has not been spared either. Last week, almost all banks in Kenya reported a dip in half-year results after spending colossal amounts on loan loss provisions.
Even so, Stanbic Kenya CEO Charles Mudiwa is optimistic that things will soon shape up, urging the world to maintain the positive spirit in fighting the invisible enemy. Although his bank for instance reported a 35 per cent drop in profits for the six first months of the year, he is happy that they put people before profits.
The decorated soft-spoken career banker talked to The Star’s Victor Amadala on how his bank, the first in Kenya to offer debt holiday to borrowers is coping during these tough times and its contribution to the fight against the virus which has since infected over 30,000 people and claimed just above 500 lives.
This pandemic has really messed peoples’ lives world over. How has the experience been like to you at Stanbic Bank Kenya?
Everyone regardless of the social-economic pyramid has been affected. As you rightly put it, the virus dented our bottom-line as witnessed in our half-year results. The drop in earnings was expected especially after the country was in semi a lockdown stating at the end of the first quarter, halting business activities.
However, the priority is how we received and dealt with it especially in safeguarding the health and well being of our staff and customers. We started putting systems and capabilities in place to minimize health risks and business disruption even before the country announced its first case mid-March.
What are some of the steps your bank took in this regard to ensure business continuity while supporting customers and the country to wrestle with this monster?
Stanbic Bank Kenya has undertaken a review of its business and operating model to ensure that we serve our clients more effectively and efficiently while strictly observing the health protocol to contain the spread of the virus.
Our digital products offer ease and convenience, no matter where you are located, and this replaces the need to visit our physical branches. This has seen us drastically cut on the number of staff in branches, with digital, contact-free banking help our clients serve themselves from the comfort of their houses.
We also quickly embraced online meetings by relationship managers and as part of customer engagement to cut one on one interaction. Overall, the pandemic has been a great accelerator of digital and agile ways of working.
Customer support
The second phase in fighting this pandemic focused on supporting our customers. Following emergency measures announced by the Central Bank of Kenya (CBK) on March 16, Stanbic Bank became the first lender in the country to announce debt relief, providing loan moratoriums to underline our commitment to walking with customers through tough economic times. We realized that the pandemic has disrupted livelihoods and as a trusted financial partner, we continue to do our best to support customers.
To this end, our individual, Small and Medium-Sized Enterprises (SMEs) and corporate partners had over Sh30 billion in restructured loans. This has provided great relief for all who have been impacted by the pandemic.
Besides, we have come up with innovative products mostly targeting small businesses. One of them is DADA, which focuses on women entrepreneurs.
It was designed with input from customers and includes both non-financial and financial offerings to see businesses achieve their desired potential. It is a solution built on an understanding that today’s woman not only needs customised financial solutions but also support that enables her to learn, connect and grow in all aspects of her life.
The bank has put incentives on several loan products under this project including working capital, unsecured loans, asset financing, mortgages and credit cards for chamas and other small businesses with 50 per cent women membership.
In addition to financial products, we therefore also offer non-financial services such as financial literacy training, networking opportunities with renowned business people and women within the community, mentorship sessions and wellness clinics.
During this period, the DADA team has been keen to build customer capacity and has set up digital engagement platforms such as webinars and virtual boot camps designed to equip businesses with management skills to guide them on how to navigate through the challenges caused by the pandemic.
That’s quite impressive. What happens after the loan holiday, in your opinion, are customers ready for this
That is no for me to say. We hope that the economy recovers so that they meet their loan obligations. However, we are not doing this blindly. We thoroughly access risks before making such decisions. In all, we believe that the additional time given to them is reasonable enough.
Besides, the banking sector in the country started to embrace IFRS9 accounting system that encourages forward-looking. We adequately cover for loans before disbursing to customers, a departure from the previous system that demanded lenders to cover for loans upon default. That is however not our primary concern. We are focused on business continuity and supporting our customers and the community.
Talking about community support, what is Stanbic Bank’s contribution so far?
As a sustainable business, we realize that we must place our communities before profit and that we cannot thrive when the communities around us are not; this remains deeply entrenched in our culture.
In response to the government’s call to mobilize resources to combat the coronavirus pandemic, Stanbic Bank Kenya through the Stanbic Foundation, in partnership with Base Titanium, Centum, Gulf Energy, Valar Frontier, and Africa Practice, handed over a total of 192 high flow nasal cannula oxygen therapy devices worth Sh147 million to the Ministry of Health.
Last week, we partnered with the Rotary Club of Nairobi- Lang’atato supply personal protective equipment and disinfectants to seven maternal and child healthcare facilities within Nairobi’s urban settlements to protect front line workers and patients against the spread of the virus.
In May, Stanbic Banks through its DADA project partnered with the Rotary District 9212 to invest in 700 sanitation worth Sh3 million to stations in different parts of the country.
We have also partnered with Radio Africa Group to support artists across the country. To this end, we have planned a virtual concert dubbed Kenya Yetu which will feature different music acts. In Africa, songs help us celebrate every event, both in happiness and sadness. They inspire hope. This will also see those musicians locked at home due to containment measures to earn something.
What has this pandemic taught you as a bank so far? What would you do differently?
This virus has challenged us on our ability to adapt to eventualities. I am glad that we managed to act swiftly to minimize health risks. We are now dealing with spillover effects. It has is a great learning curve.