Kampala, Uganda (DAILYNEWSUG). Uganda’s Commercial Bank 2017 performance varied with some Banks making profit while others registered losses. This can be interpreted from their released financial statements for the year ended December 2017.
Leading the pack in top performance is Stanbic Bank, Uganda’s leading Bank. This has seen its net profit for the year increase from Ushs 191 Billion to a whooping Ushs 200 Billion.
Stanbic Bank registered a solid performance as its balance sheet grew by over Ushs 800 billion to Ushs 5.4 trillion. Its customer deposits grew by approximately 18% from Ushs 3.06 trillion to Ushs 3.62 trillion representing 20% of all bank deposits in the country. Of the Ushs 168 Billion in net industry credit growth, Stanbic’s growth represented over 80% (Ushs 157 Billion) which meant the bank played a significant role in providing credit to individuals and businesses.
However the poor state of the Ugandan economy was reflected in the performance of some commercial banks.
Centenary Bank and Standard Chartered Bank which are two top Ugandan Banks up there after Stanbic Bank in terms of assets and clients, had challenges and this hurt their profits in 2017. Centenary Bank customers for example failed to pay back UShs 80.2 billion.
Other banks registered marginal increments in their profitability an indication of an economy struggling to recover from its worst performance in a stretch lasting more than five years (between 2012 and 2017).
During this period, Uganda’s economy grew at a rate of 5% per annum, below the required 7% needed to drive the country into lower middle income status).
Most of the 25 Commercial Banks reported a flood of Non-Performing Loans (NPLs).A non-performing loan (NPL) is the sum of borrowed money upon which the debtor has not made his scheduled payments for at least 90 days. A non-performing loan is either in default or close to being in default.
In 2017, Commercial Banks banks wrote off an estimated Shs 10 billion worth of debts.
BANKS WHOSE PROFITS INCREASED
Stanbic Bank put in a hulking and upbeat performance registering a PAT (profit after tax) from a huge Shs191b in 2016 to Shs 200b in 2017 in bad economic conditions.
Our DailyNews Business Analyst who spoke to Stanbic Banks Sam Mwogeza, Stanbic Chief Financial Officer revealed the bank reported improvement across all key financial metrics, “Our credit loss ratio was just 1.3% compared to 1.8% registered in 2016 and continues to be well below the industry average. In addition, we managed to reduce our cost to income ratio by 1.6% to 50.5% while our earning per share climbed to Ushs 3.92 per share from Ushs 3.73 in 2016.”
“Our Shareholders will be pleased to hear that based off the banks strong performance the board has approved a dividend pay-out of 90 Billion shillings, an increase of 50% over 2016.” Sam added.
DFCU: DFCU registered a huge leap in profits from a seemingly paltry Ushs 46 billion in 2016 to a grand profit of Shs 127 billion in 2017.
The blot on the bank’s performance was its Non-Performing Loan (NPLs) portfolio which increased by Shs38.3billion to Shs 96.6billion in 2017, up from Shs s58.3billion in 2016.
Equity Bank put in an impressive performance registering a profit of Shs 28 billion in 2017, which was significantly better than the Shs 17 billion registered in 2016.
The bank also registered positive growth in the amount of deposits, total assets hit Shs 1 trillion from 642 billion in 2016, while its total qualifying capital jumped almost tow fold from Shs 75 billion in 2016 to 143 billion in 2017.
BANK OF INDIA (Uganda) had a good year too, registering a profit of Shs 3.5 billion from Shs 2.3 billion in 2016. Other financial metrics were generally good.
ECOBANK made a net profit of Shs 1.5 billion in 2017 which is an increment of Shs 700 million from the 813 million registered in 2016.
The bank’s portfolio of Non-Performing Loans also decreased to Shs 9 billion from 10 billion while the debts written off also reduced significantly in 2017 to a mere Shs 393 million. In 2016, Ecobank wrote off debts worth Shs 7 billion.
KCB BANK Uganda Ltd recorded an impressive return Shs10.2 billion as net profit in 2017 from Shs 5.4 billion posted in 2016.
The bank’s Non-Performing Loans (NPLs) almost remained unchanged at Shs5.19 billion in 2017, from 5.1billion in 2016, while bad loans written off reduced to Shs 2.3 billion from Shs 8.97 billion.
BARCLAYS BANK Uganda, too registered an increment in net profit from Shs 55 billion in 2016 to 72 billion in 2017.
However, Non-Performing Loans (NPLs) grew by 51.5% to Shs 106.7 billion in 2017, up from Shs70.4 billion in 2016.
Bank of Africa, too, made net profits of Shs 16 billion in 2017 compared with 12 billion in 2016.
The bank’s Non Performing Loans portfolio also decreased to Shs 2.6 billion from 2.7 billion in 2016, a difference of Shs 100 million capping a positive year for the bank.
BANKS WHICH REPORTED LOSSES/DIP IN PROFITS
This is one category where no commercial bank wants to belong but 2017 had a fair share of scalps within the banking industry.
Many banks reported a dip in their profits while two banks, Cairo International Bank (CIB) and Commercial Bank of Africa (CBA) out rightly reported losses.
Cairo International Bank reported a loss of Shs 1.45 billion, which is marginally lower than the Shs 1.46 billion reported in 2016.
Most of the bank’s metrics did not fare well. CIB’s NPLs increased to Shs 2.5 billion from Shs 1.6 billion in 2016 while it wrote off more bad debts in 2017 (Shs 450 million) than it did in 2016 (Shs 235 million).
On its part, CBA posted a loss of Shs 1.2 billion in 2017.
The positive thing out of this loss is that it is much lesser than the Shs 8.1 billion reported in 2016.
The bank is not out of the woods yet given the fact that its NPLs portfolio burgeoned to Shs 7.8 billion in 2017 from Shs 6.1 billion in 2016.
CBA’s total capital as of December 2017 is Shs 30 billion which is three times less than that of Pride Microfinance (Shs 92 billion), a credit institution and 17 times less than Standard Chartered Bank’s capital of Shs 375 billion.
Yet despite that impressive capital, Standard Chartered’s profits declined in 2017.
The Bank posted a profit of Shs 111 billion in 2017, which is 18 billion less than the Shs 129 billion, it registered in 2016.
The bank also wrote off bad debts worth 17 billion, compared to Shs 17 billion worth of debt written off in 2016.
Another big bank that did not do well is Centenary Bank whose profit after tax fell by 8.7% to Shs100 billion in 2017.
In 2016, the bank registered a profit of Shs 109 billion.
Looking at the bank’s profitability for the year, Patrick Stanbic Bank CEO noted that the bank managed to achieve much improved efficiencies in both its control environment and management processes helping reduce operating expenses by approximately Ushs 15 Billion year on year. This ensured that despite a reduction in the banks overall income, our net profit for the year actually increased from Ushs 191 Billion to a record Ushs200 Billion. “This outcome confirms our customer centric approach is working. Our Investments in the further integration of digital technology within our product and service offering also contributed to a reduction in our cost to serve while giving our customers greater access and flexibility to bank if, when and whichever way they wanted.”