Boss talk
Abdi Mohamed: CEO of Absa Bank in Kenya eyeing fintech deals after one month in office
Friday, May 19, 2023
Abdi Mohamed is the CEO of Absa Bank in Kenya. Explanation | Joseph Brassa | NMG
Abdi Mohamed celebrates his first month in his position as Managing Director and CEO of Absa Bank in Kenya next week.
Mr. Mohamed is not new to the Bank and the group has been within the company for nearly three decades.
He was Chief Operating Officer at the then Barclays Bank Kenya (now Absa Kenya) seven years ago.
Mohammed spoke to The daily business about his priorities, what he brings on board and what can be expected from his leadership.
Having spent time in regional roles in Zambia, the UK and Tanzania, how has this experience served you as you take on the new role?
Roles have given me opportunities. Being an insider gives me first some good ideas about what is going on locally and inside the Bank while I get a view from there.
I can be critical looking at it from the outside but I also have a broader perspective.
On the other hand, when you travel and work there, you learn a lot and pick up different things from a product perspective and from some of the solutions that we’ve tried elsewhere and worked with.
Intrinsically as a leader, some of the skills you choose around management, transformation, and culture are also important.
These journeys, some of which were difficult, prepared me for the next stage of what we had to deal with.
She cited a bumpy ride in elementary school in Garissa…then starting as a cashier at Barclays before becoming a branch manager. How did this trip shape you?
There is no magic answer to the question. I think it’s about having a vision and being clear about what you want to do and what you want to achieve.
It is about staying the course and being committed; It’s resilient…you can imagine 29; Not every day is a walk in the park, there are days when you deal with real challenges and issues.
I’ve talked a lot about mentoring and making sure we have leaders in the next generations.
I’ve had a lot of mentors and some of them are peers who challenge each other. I also have many leaders in the organization who have played this role for me.
I had leaders who believed in me, helped me take the next step and risked me, knowing I wasn’t 100% ready.
I’ve also tried to be that person to others, which are the stories I’m most proud of. The current CEO of Absa Tanzania is someone I hired at the bank who ended up as my successor; In Zambia, we have two of my teams now running.
In Kenya, I have some examples of people on my team who have run other banks, including the current CEO of Housing Finance.
There have been concerns about banking sector liquidity in recent weeks as we look at interbank lending rates et cetera. Is this something you care about?
In general, liquidity challenges will vary from bank to bank. Our average liquidity, for example, is in the 39 percent range, and so, not a huge concern there.
For the industry in general, liquidity is okay and so finding that banks have the opportunity to invest not only in clients’ assets but also in government instruments is always a good sign of liquidity.
However, within the industry, there are different players with different liquidity levels and this is where overnight pricing comes into play.
I come from a completely different regulatory environment; Do you feel that changes should be made to local policies?
If you look at how central banks have operated during this difficult period, they have been very good.
We have been able to collaboratively address issues between ourselves, the Central Bank of Kuwait and the government in unprecedented times even when we have had to upgrade some of the standard tools available.
As we anticipate first-quarter earnings results from your bank next week, banks have been asked how the sector remains profitable during shocks.
First of all, this is a good place for you. The last thing you want for any economy is for the banking sector to run into trouble.
It is an important sector that underpins all the others and in many ways, it is also an indicator of the direction in which the economy is heading.
If the banking sector is doing well, that’s always a good thing. However, this is not something that just happens.
We spend a lot of time doing the right thing, running a sustainable business, dealing with risk management, proper governance so that macros unfold, you can take the right action at the right time.
Absa got approval for risk-based loan pricing and your expectations were executing the same in the second half of 2023, what’s the progress so far and what are your criteria on pricing the new loan?
This work is still in progress. However, we view risk-based pricing as not just a pricing component.
We see it as a huge positive for the industry in terms of not only creating higher risk higher rates but ensuring that people who actually pay and who are low risk customers get the benefit as well.
Overall, we see it as a huge benefit to the customer and the industry in terms of risk management going forward.
Under the 2023 Finance Act, the national treasury has proposed lower tax charges on money transfer fees by banks.
certainly! In general, the drive to support digitization and make sure that the economy becomes more digital reduces the overall cost to the economy to the extent that some of those fiscal measures deal with this problem.
In this way, it helps us to provide more solutions to customers in a way that makes digital payments better.
You now have a life insurance unit and have recently announced a return to the custodial business. What else should we expect?
One of the big priorities is to scale those businesses that we started. Yes, it’s growing fast, but it’s just a small part of our combined business. We are looking for partnerships, especially in the field of financial technology.
We started an insurance business, but I would say it’s a comfortable area because the industry is so close to banking.
I agree with you, today our name should only be Absa. There’s more we can do with the Foundation in terms of helping the economy and being more involved in what’s going on in the overall ecosystem whether you’re researching medicine or education.
There are many entities that are doing great and need a banking partner which is where we come in.
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