In 2024, the Kenyan banking sector faced high interest rates, rising loan defaults, and limited credit access for small businesses. Despite these challenges, the country’s top bank CEOs received record-breaking compensation, sparking discussions about the equity of the financial system.
KCB Group’s Paul Russo emerged as Kenya’s highest-paid bank CEO, earning $1.9 million (KES 250.2 million), a 40.8% increase from the previous year. This payout underscores a trend among Kenya’s largest banks, where executive pay packages soared even as many businesses and households struggled under tough economic conditions.
Bank CEOs Compensation: A Record Year
According to financial statements, the total compensation for bank CEOs of Kenya’s nine largest commercial banks reached $9.3 million (KES 1.2 billion) in 2024. This represents significant growth in executive pay across the board:
- KCB Group CEO Paul Russo: $1.9 million (KES 250.2 million) — a 40.8% increase.
- NCBA CEO John Gachora: $1.6 million (KES 208.4 million).
- Standard Chartered CEO Kariuki Ngari: $1.3 million (KES 174.4 million), up 43.5%.
- Equity Bank CEO James Mwangi: $1.2 million (KES 166.3 million), up 4.7%.
- Co-operative Bank CEO Gideon Muriuki: $1.3 million (KES 172.5 million), a rise of 11.7%.
- Absa Bank Kenya CEO Abdi Mohammed: $852,126 (KES 109.8 million), up 39.8%.
- Stanbic Bank Kenya CEO Patrick Mweheire: $741,148 (KES 95.5 million), an increase of 12.8%.
- I&M Bank CEO Kihara Maina: $537,817 (KES 69.3 million), down 9.7%.
- DTB CEO Nasim Devji: $488,148 (KES 62.9 million), a 4.2% decrease.
Rising Profits Amid Economic Struggles
Kenya’s banking sector posted a record $2 billion (KES 262.3 billion) in pre-tax profit in 2024. Much of this profit came from income on government securities and widening interest margins. By prioritizing high-yield Treasury instruments over loans to struggling households and SMEs, banks achieved significant returns while limiting risk exposure.
However, this approach has drawn criticism. Many households faced increased borrowing costs due to higher interest rates, while small businesses struggled to access credit, hindering economic recovery.
Boardroom Payouts: Following the Trend
The rise in executive compensation was mirrored by an increase in boardroom payouts:
- NCBA directors received $5.1 million (KES 660.2 million), a 54.4% increase — the highest among listed banks.
- Co-operative Bank directors: $3.6 million (KES 473.4 million), up 28.1%.
- Standard Chartered directors: $2.9 million (KES 378 million), an increase of 17.4%.
Notably, only KCB Group and I&M Bank reduced board compensation. KCB cut payouts by 20%, while I&M directors took a marginal pay cut.
Central Bank’s Concern Over Lending Practices
The Central Bank of Kenya (CBK) raised concerns over the sector’s lending priorities. Governor Kamau Thugge criticized banks for failing to extend affordable credit to the productive economy.
“All we are asking is for banks to be fair and to act in the same way that they were quick to raise lending rates when the policy rate was increasing,” Thugge said. He warned that the current trajectory of high lending rates could stifle economic growth.
Impact on Workers and Customers
While top executives and board members enjoyed record payouts, banks implemented cost-cutting measures targeting junior staff. For instance, Standard Chartered slimmed its payroll by reducing hiring through attrition, despite posting record profits.
Households and small businesses bore the brunt of these policies, with limited access to credit and high borrowing costs. Inflation further exacerbated the financial strain on families, highlighting a disconnect between the banking sector’s profitability and its role in supporting economic growth.
The Debate on Banking Priorities
The disparity between executive payouts and the struggles of borrowers raises critical questions about the banking sector’s priorities. While it is essential for banks to remain profitable, there is growing pressure for financial institutions to balance shareholder interests with their responsibility to the economy.
In an era of record profits and executive pay, the challenge for Kenya’s banking industry lies in ensuring inclusive growth. Bridging the gap between profit-making and economic development will require banks to rethink their strategies and place greater emphasis on supporting SMEs and households.
