Bank of Africa posts Shs1.2b profit up from Shs6.7b loss

By Jonathan Adengo

The I&M Bank building in Nairobi. PHOTO | FILE 

In Summary

The mobile banking unit in Northern Uganda, made their product accessible to new markets.

Kampala- Bank of Africa (BOA) returned a net profit of Shs1.2 billion at the end of 2014, up from a loss of Shs6.7 billion in 2013.

Mr Claver B. Serumaga, the general manager business development at BOA, explains that the introduction of cutting edge technology like the Bank of Africa Mobile Wallet launched in March 2014, as well as the mobile banking unit focused on Northern Uganda, made their product accessible to markets that would otherwise not be able to reach customers.

He says this strengthened their efforts at improving the quality of their portfolio through better due diligence on credit control and remedial action rather than aggressive portfolio growth.

Trading income constituting interest on deposits and placements, interest on loans and advances, interest on investment securities, fees and commissions income and foreign exchange income, among others, increased by 34 per cent (year on year) with the introduction of foreign exchange services. This was supplemented with other income from recoveries of non-performing loans.

Mr Serumaga adds that increase in operating income cushioned the bank against operating costs arising from additional depreciation on capital expenditure on new projects in 2014 such as a new branch in Masaka, a business centre.

“The income tax credit for the year relates to a combination of withholding tax expenses on treasury bills which is charged at 20 per cent of the interest earned (lower than the corporation tax rate at 30 per cent) but is also a final tax on related income without consideration of operating costs of the business; reduced by a significant deferred tax credit arising largely from deferred tax losses carried forward from prior periods,” he elaborates.

Fees and commissions also picked up with increase in transactions stemming from improved customer service and increasing customer numbers. The introduction of products such as Mobile Wallet also improved transaction volumes while managing the capital costs of expansion.

The non-performing loans decreased from 10 per cent to 2.7 per cent as a result of the bank concentrating on improving portfolio quality through better due diligence on credit and control as well as remedial action, rather than aggressive portfolio growth in 2014.