Banks in 2019: Commercial Banks Recorded Shs685 Billion in Non-Performing Loans

By DailyNewsUG Correspondent

At the beginning of May 1, 2020, the last commercial bank published its results for the year 2019 and one conclusion was clear – as some banks effortlessly rake in billions of shillings in profits, their counterparts at the bottom end struggle to make a footing in the industry.

Five banks – Stanbic, Centenary, Standard Chartered, Absa, and Dfcu – made a whopping Shs 690bn in total net profits, making them the most profitable banks in the industry. Three banks – Stanbic, Centenary and Stanchart – had net profits above Shs 100bn each. Absa and Dfcu’s were above Shs 70bn.

Yet as the five top banks trailblazed, it is also clear a lot of banks are struggling to get their footing into the industry. At least seven banks made losses – although there were movements where hitherto profit-making banks made losses while loss-making ones transitioned to profit.

For instance, KCB saw one of its worst performances after it turned in a Shs 13.5bn loss in 2019 from a Shs 9.6bn profit in 2018. The bank changed management in 2018.

Orient bank, Commercial Bank of Africa (CBA), and ABC bank also moved from profit to losses. Cairo International bank, Exim bank, and Tropical bank continue their loss- making streak although some like Exim cut on the loss.

In the same vein Commercial banks recorded about Shs685.7b in non-performing loans for the period ended December 31, 2019, according to details compiled from annual performance results.

This was a growth from Shs535.8b that the industry registered in the same period in 2018.

A loan is declared non-performing if a borrower defaults on payment for at least 90 days or three months.

Banks are required to highlight such loans as bad debts to inform shareholders and the public about the financial status of such a bank.

In the period under review, according to details Stanbic Bank, which is Uganda’s largest bank by assets, registered the biggest share of non-performing loans, posting Shs120b in 2019. The bank also registered the same amount in 2018.

However, the bank registered substantial growth in both assets and profits in the same period.

Assets grew to Shs6.6 trillion from Shs5.4 trillion in 2018 while profits rose from Shs215b to Shs259b in the period.

Absa, which early this year completed a transition from Barclays in 12 markets across Africa, saw its non-performing loans increase to Shs109b from Shs91b.

In the same period, Absa registered a 22.5 per cent growth in assets from Shs2.8 trillion to Shs3.4 trillion while profits grew by 13 per cent from Shs69b to Shs78b.

Dfcu Bank registered a slight growth in non-performing loans from Shs80.8b to Shs89b in the period

Centenary Bank, which has been expanding across Uganda in the last five years, registered a substantial growth from Shs39.8b in 2018 to Shs60.8b.

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