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International bank of Somalia (IBS) clinches company of the year crown

In a contest that tested the foundation banking in Somalia, IBS proved itself the most efficient, most ethical and more importantly, the most trusted

International Bank of Somalia (IBS) scooped the 2018 Bank of the Year Award at the recently held Somali Annual Business Awards (SABA) at a gala attended by the Somali business community titans and foreign dignitaries.

The 2nd edition of SABA Awards gala that was held in Mogadishu on the 11th of January 2018 also saw companies like Ocean Airlines’ CEO win the CEO of the Year award and Company of the Year award go to Hass Petroleum among others represented the best of the best in a fast stabilising and exponentially growing economy.

The banking industry is a complicated one to audit. Somalia has several banks, but only a few of them are eager to take part in processes such as the one that expert auditors use in auditing them to determine if they are worth the top spot or not. In 2017, banks were the most reluctant group to allow for third party auditing of their books.

Writing in their official Facebook after the gala, IBS took time to express its gratitude to the public for choosing the bank as their banker and trusting them.

“Thank you very much for enabling our success as a bank. Congratulations to the team in ensuring that our customers get the best services, and we thank them for choosing our services. We also would like to thank the professional staff at the bank as well for their diligence, hard work and professionalism. Thank you for all of IBS,” the post read in part.

Somalia has about six provisionally licensed banks and in the race to the top award, where the identities of clients, revenue growth of each bank, cash adequacy ratio, portfolio at risk and dormant account values among other sensitive aspects of banking are put under a microscope, IBS trumped them all, presenting stellar credentials.

IBS is a bank is in a developing economy yet it delivers double digit growth percentages. This is a bank that posted a 15% growth in 2015 and in a short time, posted 40% at the end of the 2016 financial year. In terms of how capable it is of handling its clients and customer banking needs, IBS is unrivalled. And the bank has designed plans that will enable it to exceed the current capacity. This will be good both for the bank’s shareholders and for the customers.

To achieve this, the bank has put in place an aggressive sales plan, an effective marketing campaign and robust customer service strategies that will ensure higher customer retention and attract new customers from competition and the unbanked community. 

It is curious to note that in 2016 when the bank posted its highest profitability yet, they had a smaller number of clients compared to 2015.   

Revenue growth of the bank in the last three years has maintained a positive upward trend though 2015 and 2016 but it made a 5% jump in 2017.

In terms of the average annual total shareholder return, the bank reported 14% and 17% ratios in 2016 and 2017, indicating that shareholders’ value was enhanced and implies that their equity is placed in the right business.

Operating as one of the leading banks in the country, IBS has a Capital Adequacy Ratio (CAR) of 53%. This demonstrates that the bank is well capitalised but with the fast growth on lending it should find a way to increase capital so that it does not slow more lending and to maintain healthy ratios.

However, even for the winner, there are a few areas that still needs work. One such area is that the bank needs to be regular and strive to attain international standards, it needs to accept and adopt auditors recommendations for total betterment of the business and be at peace with other stakeholders like regulators, shareholders, etc.

Also, in terms of top level management, Board of Directors, major shareholders and senior management; there is need for the three arms of the business to be clearly distinct from each other and each to only perform their respective roles. All the three need to fully cooperate and complement each other. No point having one arm playing into the space that isn’t in its purview. They need to be fully transparent with each other and offer best advice to each other in good faith. This is very important for the general good health and stability of the bank.

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