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The Phillips Oduoza Experience At UBA

Phillips Oduoza
Posted: May 23, 2016 at 5:11 pm   /   by   /   comments (0)

Kirk Leigh

2010 was a turbulent year for the banking industry. It was the year Phillips Oduoza, a UNILAG Engineering graduate with over twenty years banking experience was asked by the UBA board to step into the large shoes of Tony Elumelu as MD/CEO of the Pan African bank.

It was no ordinary time; it was testy time for the financial system as a whole. Apart from a global financial crisis sweeping the globe, which took-out century’s old banks in its wake, local banking regulator, the Central Bank of Nigeria (CBN), had called into question the risk management ability of banks after infusing N620 billion into the system to stave off a systemic collapse.

Four big banks (Union Bank, Oceanic Bank, Afribank and Intercontinental Bank) and Finbank had been declared insolvent for warehousing a whopping 40 percent of nonperforming loans in the system. According to the CBN, they represented a significant systemic risk as they held some 30 percent of deposits in the banking system in addition to the fact that they had abused the Expanded Discount Window (EDW).

The Sanusi Lamido Sanusi led CBN had had it, so it took measures to restore the system, among which was the January 2010 regulation limiting the terms of CEOs of banks to a maximum of 10 years, which will require some sitting CEOs to resign by July 31, 2010.

UBA - Asset Vs Deposit


It was CBN housecleaning that threw up Oduoza, then the most senior executive director in UBA.

Was the alumnus of the Harvard Business School’s Advanced Management Programme prepared for the challenge? His response to the strategic challenges presented by the competitive environment at the time, suggests that he was.

He told shareholders at the 2011 annual general meeting of the bank that key priorities for the bank include, strengthening the bank’s value proposition, consolidating its African subsidiaries, driving low cost deposits and aggressive loans growth. He also made it known that the bank was going to drive up non-interest income, commit to lean growth and process improvement, among other strategic initiatives.

Perhaps the graduate of Civil Engineering would be mostly remembered as the man who returned the bank to profitability as the bank was able to reverse a loss position of N1.94 billion in 2010 when he took the saddle to making a profit of N48 billion in 2014.

But besides turning on profit, Oduoza impacted on the bank’s ability to do business as it saw a significant vault in total assets by more than a trillion naira or 72% in the last five years from N1.6 trillion in December 2010 to N2.8 trillion as at December 2014.

He also grew net operating income by 24% from N154 billion in 2010 to N192 billion in 2014.

UBA - Deposit Vs Loan

The bank’s third quarter results for 2015 released last year shows that Oduoza will also be leaving the bank on a strong financial note. In the third quarter results released in October 2015 the bank recorded a strong 44% rise in profit after tax to N48.6 billion and a 17% rise in gross earnings to N247.2 billion.

UBA also closed the third quarter of 2015 with total assets of N2.87 trillion, loan book of N1.01 trillion and a deposit base of N2.18 trillion showing that Oduoza is leaving behind a strong performing financial institution to his successor.

But strong as the bank’s fundamentals are, shareholders and indeed the market do not seem impressed as the bank’s share price has tumbled several times over since 2010 to N3.10 as of March 4, 2016 from N8.05 in April 15, 2010.

Though this may seem a little alarming when looked at in isolation but is consolatory when it is appreciated that share price depreciation was a market-wide thing as all banks, indeed all quoted companies on the Nigerian Stock Exchange, have lost significant value in that period.

Most of the loss in value occurred in 2014 due to the triune of oil price shocks, naira depreciation, and tapering by the US Fed. This led to a whooping portfolio outflow of N793.17 billion in early January of 2015.

Acknowledging the dip in the market then, Director General of the Nigeria Stock Exchange said “bearish sentiments prevailed for most of the year as foreign investors steadily withdrew from the Nigerian market due to currency risk and the recovery of developed economies, and the effects of the US Federal Reserve tapering of its quantitative easing policy.”

There is a consensus that the bank, like many other banks would post impressive gross revenue come year-end as indicated by the last three quarter results. What industry analysts are not too certain about is if the full year results would be as juicy given the preponderance for heavy provisioning as already indicated in the profit warning of FirstBank, peer of UBA.

If the recent profit warning by FirstBank is anything to go by giving the identical business profiles and exposures of the peer banks, UBA’s bottom line could mirror that of FirstBank. The reflection may not be in magnitude but in direction, namely southward.

If this happens, it would mean that though Oduoza succeeded in building a stronger, more diversified institution with a solid foothold in Africa and better risk profile but failed to usher in an era of more robust profits.

He took the reins in about the most difficult period in Nigeria’s banking history when oil, Nigeria’s mainstay, is exchanging at its lowest in decades. And at a time the naira has lost nearly half its value against the dollar.

Oduoza has absolutely no control of the external environment which is constantly in a state of flux.

But what he can control, he did control such as upping the revenue contribution of the bank’s African subsidiaries; improving it to N64 billion in 2014 compared to N56.8 billion in 2013, this is in spite of the volatile market environment (representing about one-fifth of the Group’s earnings).

He even gave the assurance that “as we gain critical mass and deepen our brand penetration in these African markets, we should see increased earnings contribution from these subsidiaries. This diversification benefit reinforces our unique position as a Pan-African bank.”

UBA’s strides got some outside recognition in terms of awards, including The “Best Retail Bank” and “Best Bank in Corporate Social Responsibility” in the BusinessDay Annual Banking Awards; Winner of the Prestigious Sectoral Leadership Award in the 2013 Pearl Awards; Bank of the Year Award 2013 in Liberia, courtesy of The News newspaper; The “Best Emerging Market Bank of the Year 2014” in Cameroon for the fourth consecutive year by Global Finance magazine; The “Best Bank of the Year 2014” in Senegal for the third year running by The Banker magazine; and The “Best Bank of the Year 2014” in Burkina Faso, courtesy of the Global Finance magazine.

He consolidated UBA’s position as a leading bank in Africa with operations in 19 African countries and 3 global financial centres; New York, London and Paris, offering banking and financial services to over seven million customers.

Come July 31, 2016, Oduoza would bow out of UBA after two terms as MD/CEO in Nigeria’s most diversified bank. He would be handing the baton to Kennedy Uzoka, the current deputy MD/CEO who had long been pencilled down for the role since Oduoza was appointed CEO, attesting to the solid succession plan of the bank whose origins go back to 1946.

“With Mr. Kennedy Uzoka’s appointment, UBA has once again proven the resilience of its succession planning system. It is important that a bank has such a clear succession planning system in place especially for key roles within the bank. It is a good indication of the existence of a strong corporate governance system”, said a banking analyst in Lagos.

Insiders say Kennedy Uzoka was selected at a meeting held at UBA House on the morning of March 1, 2016. This was after due consideration that the tenure of the current Group Managing Director and CEO, Phillips Oduoza, who has served his two terms piloting the activities of UBA Plc in the last six years is coming to an end. He is due for retirement on July 31, 2016. In order not to create any uncertainty over the bank’s future, the board met and chose Mr. Uzoka to lead the bank into its next phase of growth.

Uzoka’s immediate challenges, apart from consolidating on the achievements of Oduoza, would be how to navigate the bank in this period of uncertainty presented by the falling naira and nose-diving oil price.

A statement from UBA claims that he comes well prepared for his new position. He has most recently been leading the transformation agenda of the bank, after returning from completing the Advanced Management Programme of Harvard Business School.

Mr. Uzoka has over two and half decades of experience in commercial banking, strategy and business transformation. Prior to his sabbatical at Harvard, Mr Uzoka served as Deputy Managing Director, UBA Group and was also the CEO of UBA Africa, responsible for the Group’s operations in 18 countries across Africa.

A multiple award winner, Uzoka has also supervised other key areas in the bank including e-banking and information technology. He has also supervised the bank’s business in New York and London in addition to strategic support groups such as Human Resources, Legal Advisory Services, Procurement and Vendor Management, Corporate Relations and Marketing, among others. He has also had direct supervision and oversight of critical business functions like Group Treasury and International Financial Institutions and Transaction Banking, UBA Pensions Custodian, Consumer Banking and Cash Management.

With a man so eminently qualified for the role, Oduoza can retire content in the fact that his labours would not be in vain.