Stanbic records Shs200b profit

The growth in customer deposits played a significant role in the bank’s profit growth. FILE PHOTO  

In Summary

• Dividends. The bank will increase shareholder dividends from Shs3.73 to Shs3.92 per share.
• The bank also approved a dividend payout of Shs90b indicating an increase of 50 per cent over what was paid out in 2016.

By Eronie kamukama & Jonathan Adengo

Kampala. Uganda’s largest commercial bank by assets has managed to yet again pull off another mile stone registering a 5 per cent increase in after tax profit which hit a record Shs200b.

The financial results released yesterday indicate that the bank’s profit after tax rose from Shs191b in 2016 to Shs200b in 2017 against a sluggish credit uptake by the private sector.

This was largely driven by efficiencies under cost control and credit risk that compensated for lower operating income.

“…helping reduce operating expenses by approximately Shs15b year-on-year. This ensured that despite a reduction in the bank’s overall income, our net profit for the year actually increased,” Mr Patrick Mweheire, the bank’s chief executive, said.
Mr Sam Mwogeza, the Stanbic chief finance officer, said the bank had reported improvements across all key financial metrics.

“Our credit loss ratio was just 1.3 per cent compared to 1.8 per cent registered in 2016 and continues to be below the industry average. In addition, we managed to reduce our cost to income ratio by 1.6 per cent to 50.5 per cent while our earning per share climbed to Shs3.92 from Shs3.73 in 2016,” he said.

While explaining the performance, Mr Mweheire said: “We out grew the market in credit growing five times more than the market average,” adding that the bank operates a diversified business model with a revenue mix between interest and non interest revenue.
“We lead a diversified business with the revenue mix almost 60:40 so we were able to grow the non-lending piece of our business which accounted for most of our growth,” he said.

According to the financial results, the bank recorded a growth in the net income of Shs131.2b, which accounted for 65.5 per cent of the profit growth.

Bank loans and advances grew by 8 per cent in 2017 and resulted in a market share gain of 19 per cent from 17.8 per cent at the start of the year.

Customer deposits grew by 18 per cent to Shs3.62 trillion from Shs3.06 trillion propelling a gain on market share to approximately 20 per cent of all banking deposits in 2017 from 18.7 per cent at the close of 2016.

Mr Mweheire said of the Shs168b in net industry credit growth, Stanbic’s growth represented more than 80 per cent (Shs157b) of that, adding that the bank continues to play a pivotal role in supporting continued economic recovery and the growth of business activity in a number of ways.

“First and foremost, we led the way to facilitate businesses of all sizes by making loans a lot more affordable by reducing our Prime Lending Rate consistently in line with reductions of the Central Bank Rate by Bank of Uganda,” he said. Stanbic, he said, matched the 2.5 per cent reduction in the CBR rate from 12 per cent in January 2017 to 9.5 per cent in December 2017.
Currently at just 17.5 per cent, Stanbic Bank has one of the lowest lending rates on the market.

Stanbic Bank has an asset base of Shs5.4 trillion or $1.5b. The bank has proactively supported the development of key sectors such as energy and infrastructure by providing key financial instruments necessary to protect government’s execution of vital and sizeable infrastructure projects.

The bank also approved a dividend payout of Shs90b indicating an increase of 50 per cent over what was paid out in 2016.
Therefore, the dividend per share for Stanbic Bank shareholders will thus climb slightly from Shs3.73 to Shs3.92.

Ownership
Stanbic Bank Uganda is 80 per cent owned by Stanbic Africa Holdings, a holding company of South African Standard Bank. Other shareholders include NSSF with a percentage ownership of 2.15 per cent, Duet Africa Opportunities Master Fund (1.15 per cent), Sudhir Ruparelia (0.65 per cent) and Kuwait Investment Authority (0.48).

Others are SBC Mauritius Re Africa Opportunity Fund (0.48 per cent), Central Bank of Kenya Pension Fund (0.45 per cent), Duet Gamla LIV Africa Opportunities Fund (0.43 per cent), Ibrahim Kironde Kabanda (0.40 per cent) and Frontura Global Frontier Fund (0.39 per cent).

editorial@ug.nationmedia.com