Leadership instability after Maria Ramos’ departure in 2019 has been a drag on Absa’s performance and stifled innovation, says Kenny Fihla, who took over as Group CEO in July.
Fihla’s appointment came after the dramatic exit of Arrie Rautenbach, who was forced out by the board after a short, tumultuous reign.
Rautenbach had succeeded Daniel Mminele, who left following a clash on strategy with the board. “When there are too many leadership changes, as has happened at Absa post Maria Ramos, that is not optically positive for the organisation,” Fihla told Business Times in an interview on Thursday.
“It also has other unintended consequences internally, in that it paralyses the organisation from being innovative, as people don’t like to take risks when they’re unsure about their roles.”
Rautenbach was at the helm for two years before accusations of a reversal of transformation, an attempt to remove the head of Africa Regional Operations despite the impressive performance of the unit, and poor interim results saw him and the board agreeing to a separation in October 2024. He went on gardening leave, and officially left the banking group in April 2025.
Fihla said while staff morale took a knock as a result of the numerous leadership changes, there was now a sense of excitement. “People feel we are on the cusp of doing something big, and the challenge for me is to make sure I do not disappoint them.”
He said while banks could be bureaucratic in nature, Absa was more so due to the frequent leadership changes, and he was determined to remove some bureaucratic layers to simplify decision-making processes.
“That is hugely frustrating to our employees who can’t make simple decisions because everything has to go through committees. It is my job to identify bureaucracy and to remove these obstacles wherever I can, to make sure we still have appropriate governance without it being so frustrating and disempowering.”
That is hugely frustrating to our employees who can’t make simple decisions because everything has to go through committees. It is my job to identify bureaucracy and to remove these obstacles wherever I can, to make sure we still have appropriate governance without it being so frustrating and disempowering.
— Kenny Fihla, Absa Group CEO
Absa has a footprint in 16 countries. Its corporate and investment bank unit has a strong market share, but its retail business has fallen behind competitors, FirstRand and Standard Bank.
Fihla said, as the third biggest bank in the country, Absa’s top line suggested it still had a decent client base but was too reliant on income from lending. “What is a challenge is that we still make our money from lending … it is interest income, and we do not leverage that to do more with clients.”
The business was looking to improve its bottom line and improve its return on equity (ROE). Fihla noted that value was lost because of Absa’s higher cost base. “The value gets lost because the composition of our revenue is driven largely by debt, which requires that we hold a lot of capital, and that depresses the ROE,” he said.
“It is in the nature and composition of our business, which is why we have to act on the right things that defend the top line while changing the composition of the ROE to drive efficiencies.”
To make the business more sustainable, it needs to attract more young people to its retail bank, which has lagged behind the corporate and investment banking (CIB) arm. Fihla puts this down to previous ownership by British banking giant Barclays, which he said focused on growing the CIB business at the expense of the retail division.
“I think that had to do with the Barclays’ ownership of Absa; Barclays was good for the CIB business; it benefited, but the retail business was somehow neglected. So, if you add the constant changes to a business that is neglected, you have a double whammy in a sense.”
With the retail market dominated by Capitec, which serves about 25-million customers — mainly in the lower and middle segments — Fihla said they conducted a deep analysis of the competitive environment and found that traditional banks had generally neglected the lower end of the market.
“I have no doubt in my mind that, while there are banks that have been successful in certain areas, in some respects their success was as a result of the inaction of banks like Absa, especially in the lower end of the market.”
He said traditional banks had regarded banking the lower end of the market as an obligation under “inclusive banking” but, generally, dismissed the segment as unprofitable, rendering them unable to compete with Capitec. “They banked people as part of the broader inclusive bank offering, which means we are doing it because we are expected to make sure everyone is banked; we are not doing it because it makes commercial sense.
“When you are doing something because you are being forced to do it, you are not going to put your best foot forward, and consequently, we ceded that space to other banks.”
He said Absa should position itself as a bank for all members of a family. “If the bank has a relationship with me, and I have children, it is much easier for them to bank my children and to manage the relationship as a family relationship, so when the kids grow, they grow up with Absa, they are already customers. So it means changing the mindset.”
Absa, whose headline earnings improved 17%, increased its ROE to 14.8% from 14.0% in the first half of 2025. The group previously committed to maintaining a 15% ROE this year.
Fihla said the bank would, in the next few weeks, inform the market of its new ROE target for next year, along with short- medium- and long-term targets.
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