Stanbic defies Covid-19 to post growth in loan book

The growth was due to sustained low lending rates in a year that was grossly ravaged by Covid-19. PHOTO | FILE

By MARTIN LUTHER OKETCH

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Stanbic Bank yesterday said its loan book and advances grew by 27 per cent from Shs2.8 trillion in 2019 to Shs3.6 trillion in 2020. 

The growth was due to sustained low lending rates in a year that was grossly ravaged by Covid-19. 

However, the bank noted that whereas the risks have not subsided, it expects lending rates in the banking industry to drop further due to a sustained reduction in Central Bank Rate, which has been reducing to 7 per cent, the lowest rate since 2011. 

While presenting its financial results for the year ended December 2020 in Kampala yesterday, Ms Anne Juuko, the Stanbic Bank chief executive officer, said they had executed transparency in movements of the bank’s lending rate that has dropped from 18 per cent to 16 per cent over the period. 

This, she said, had therefore saved customers close to Shs26b interest payment.

Commercial bank lending rates have dropped to an average of 17.4 per cent in February from 19.6 per cent in November 2020.  

Ms Juuko said lending rates had dropped faster in the second half of 2020, prompted by interventions from the Central Bank as it sought to save the economy and the financial sector from negative shocks resulting from Covid-19 disruptions. 

The Central Bank has been intervening in the financial sector with different actions, among which included credit relief measures to reduce a spiral in non-performing and stress on the real economy. 

Stanbic’s customer deposits grew from Shs4.7 trillion to Shs5.4 trillion, representing a growth of 16.3 per cent, supported by new credit to key sectors at the height of Covid-19. 

The bank, Ms Juuko said, registered 20,000 new customers during 2020, noting a rise in deposits while profits slightly dropped to Shs242b in 2020 down from Shs259b in 2019, largely because of Covid-19 on the bank’s customer businesses.

Interest income grew to Shs490.7b during the period from Shs448.9b in 2019 while total asset slightly dropped to Shs8.5 trillion compared to She6.65b trillion in the year 2019.

During the period, according to Mr Samuel Fredrick Mwogeza, the Stanbic chief financial officer, the bank lent out more in personal loans, which stood at 21.3 per cent compared to other loan segments. 

This was followed by Commerce and social sector and other (19.3 per cent) while trade took up 13.3 per cent. Agriculture took up 12.8 per cent while building and construction contributed 11.7 per cent.  Manufacturing shared 9.3 per cent of the loan book during the period.