March 29–Stanbic Bank Uganda generated revenues of UGX 643 billion (about $171 million) during 2016 and earned a profit after tax of UGX 191 billion ($56 million), a rise of 21% and 27% respectively.
Total deposits went up by 25% to UGX 3 trillion ($830 million) a confirmation of Stanbic’s position as Uganda’s biggest bank. Releasing the previous year’s financial results, Patrick Mweheire, the Chief Executive said, “2016 was another record year for the bank; reflecting our intense client focus and solid performance across our business.”
He said profit after tax was largely driven by the diversity of the bank’s revenue streams, sold credit risk management and best possible deployment of liquidity from the strong deposit growth. During 2016, the bank processed over UGX 50 trillion worth of transactions and arranged UGX 1 trillion in credit and capital.
Mweheire said, “We had a double digit growth in deposits and showed expense discipline while continuing to invest for the future. Building upon the strength and depth of our platforms, we continued to deepen relationships with personal and institutional clients and achieved higher customer satisfaction scores during the year.”
Stanbic Bank Uganda is a member of the Standard Bank Group, Africa’s largest bank by assets. Standard Bank Group reported total assets of R1.98 trillion (about $128 billion) as at December 2015 while its market capitalization was $11.8 billion.
Net interest income, a measure of a bank’s ability to manage the spread between rates on deposits and loans/advances, showed that Stanbic made UGX 376 billion compared to UGX 311 billion in 2015. This is not bad considering the downturn in the economy with growth slowing to below 5%.
The year 2016 was characterized by relatively high interest rates and the General Elections which usually fuels inflation. According to Bank of Uganda, lending rates declined from a weighted average peak of 25.2% during the height of the election period in February 2016 to 22.8% in October 2016.
“Key to our performance was meticulous planning for the cycle. The Ugandan economy does work in cycles closely aligned to the election calendar and 2016 reflected the pressures we tend to see around election time—high inflation expectations, a heightened interest rate environment and ultimately subdued credit growth,” Mweheire said.
He said as a bank, they understood the opportunities and risks embedded in these cycles and have been very deliberate in fortifying revenues by building a diversified business model that could withstand the shocks associated with adverse economic conditions.
Mweheire said, “This is the major reason why our revenues and earnings have grown consistently in recent years notwithstanding the industry wide spike in NPL’s driven by the high interest rate environment. You will note that non-interest revenue which is not susceptible to interest rate fluctuations represents over 40% of our total revenues.”
Total assets rose from UGX 3.7 trillion in 2015 to UGX 4.6 trillion in 2016 and total liabilities excluding equity rose from UGX 3.1 trillion to UGX 3.9 trillion during the same interlude.
Stanbic was also active in the government’s efforts to improve infrastructure by providing Off-Balance sheet guarantees, Letters of Credit and bonds totaling UGX 1 trillion.
For instance, Stanbic Bank led a consortium of banks that swapped $645 million of the $1.3 billion debt, fixing the interest rate on this portion of the loan for its 15 year duration. This saved the government several million dollars by avoiding the fluctuations of a floating rate.
In addition, Stanbic plays a part in business growth. “Stanbic drives transformation of the economy by facilitating trade activities at all levels, providing affordable credit finance and supporting the national developmental agenda as the government’s leading commercial bank lender,” Mweheire said.
Stanbic collected UGX 2.8 trillion worth of taxes on behalf of the Uganda Revenue Authority and directly paid over UGX 73 billion in taxes to Treasury.
Looking at 2017, Mweheire said, “The Ugandan economy will build momentum on the back of renewed oil and gas spend. There is opportunity for good, rational and thoughtful policy decisions to be implemented which can support local businesses, create jobs for Ugandans across the income spectrum and help communities. As Uganda’s leading bank, we are well positioned to play our part in actively supporting the process.”
He said, “The bank is getting safer and stronger each year. We will continue to adjust our competitive strategy to the new world and see exciting opportunities ahead to invest and contribute to the transformation of lives in our communities.”