I&M Bank Uganda CEO, Robin Bairstow during the interview
The new Chief Executive Officer of I&M Bank Uganda, Robin Bairstow, has grand plans to make the lender a giant in Uganda’s financial services sector.
During an interface with the media at Serena Hotel in Kampala on Thursday, Bairstow described the future of Uganda’s banking industry as “pretty bright” and vowed to I&M Bank Uganda profitable.
“The banking sector is growing at about 10%… if the GDP growth is 5% and the bank is doing 10%, then if we were doing the performance appraisal of the CEOs, it is average. We would like to shoot that to 20% based on our cargo on loans, deposits and profitability because we have significantly saved on cost. The future looks pretty bright,” said Bairstow.
Speaking about the bank’s under performance in recent years, Bairstow explained that the poor performance was based on Non-Performing Loans (NPLs).
I&M Bank occupied the 6th position of banks with highest NPLs in 2022. Its NPL ratio stood at 13.02%. This is after its NPLs increased to Shs30.49bn in 2022, up from Shs3.52bn in 2021. This was against Shs234.07bn in loans lent out to customers in 2022.
“We serve customers and generate revenue for our shareholders. So, obviously the shareholders are keen to see a return to profit. The bank had to go through a period where we reset the balance sheet and our cost. At one point the cost to income ratio was over 100%. That meant it was costing them (Shareholders) more money than we made. So, the shareholders obviously were not happy with that but based on the launchpad (reorganization and rebranding), we are looking at the potential to grow ahead of the market over the next 3 years. We want an annual growth rate of close to 250% on the profit level. That is on the back of new products, fees, income and asset liability growth. The reason why we are confident with that is that we saw the same type of growth coming from other markets. We have set a good base. At one point we were at 16% non performing loan ratio. We have brought that down to 3%,” Bairstow explained.
He added: “There are two aspects to that: growth and the size of the loans and a lot of the reduction is sometimes on the back of write offs and good performance. We have been able to collect significantly on some of the loans we thought were doubtful.”
It should be noted that I&M Bank that was formerly Orient Bank rebranded to I&M Bank Uganda in 2021 after Kenya based I&M Group Plc became the major shareholder of Orient Bank, with a 90 percent stake in April 2021.
The bank made a profit of ShsShs5.61bn in 2022, up from Shs22.86bn loss recorded in 2021.
According to Bairstow, some customers had abandoned the bank’s digital banking system, but “they are now coming back based on technology that we are launching into the market.”
“That gives us an opportunity to bring back some people home and then it also allows us to find new clients,” he said.
Bairstow says that sustainability is important to the Bank.
“I am talking about sourcing green finance and advocating for lending to projects that have a good impact on the environment. So, its not doing windfall; solar, hydro electric; I am talking about tea plantations and increasing production with minimized level of emissions, and irrigation for farmers which allows them to increase yields. Those are some of the things that we want to drive together with the International Finance Corporation,” he added.
The Bank intends to leverage on loan approvals of within 30 minutes. This, too, Bairstow says is one of the areas the bank wants to rely on to win more customers and maintain them.
Fraud remains a big challenge to financial institutions. Bairstow says that digital security starts at the Industry or Central Bank level.
“Unfortunately, you have high-level cyber hacks. A lot of what we see is collusion. It’s either collusion or you have people that camp on the free email applications and the minute you say something like lost code or whatever, you have already been compromised. But banks have found a way to get around that. If you look at technology that the banks have invested in, we are in a different space that we were 5 years ago,” he said, assuring customers of the safety of their deposits.
He says that tech sells if it makes life easier.
“If its difficult to use, it’s not creating a good user experience and we need to ensure that that’s the kind of what to build on and the entire industry needs to do it. That is when the customers win. You are increasing usability and the advantages as opposed to just tech’s sake,” said Bairstow.
Overall, Bairstow says the opportunities “here are tremendous especially within the new sectors – extractive industries, are a great opportunity.”
Bairstow boasts of eight years’ experience with I&M Bank Rwanda.
During that period, the business tripled its assets, achieved double profitability over the period and maintained a big market share in a market that is extremely difficult. The Bank also rolled out some really successful products like blockchain-powered mobile money. The Bank also tripled customer base in the last 3 years.
“We have the ability to do that here. Increase the customer base. We have companies that have banked with us for the last 30 years. That is what we can build on,” Bairstow says.
Prior to Rwanda, Bairstow worked in Kenya.
During that time, and working as a Corporate Banker, he and two other banks pulled US$ 800 Million for the government of Kenya before they took out Euro loans.
“It helped bring down interest rates. It also brought the Kenya shilling to about 104. I don’t think we will ever see those levels again, unfortunately but what that did for the entire economy is that everybody benefited from it,” he said.