UGANDA, Kampala | Real Muloodi News | According to the African Markets, 2020 was a challenging year economically, with struggling sectors including health, industry, employment, and low demand for loans, resulting in interest rates reducing.
However, dividends to be paid to bank shareholders, while down, were better than expected, with commercial banks performing well in their annual performance reports.
Key Figures from Performance Banks:
Stanbic Bank:
At the end of 2020, Stanbic Bank proposed a dividend of UGX 1.86 per share, valued at UGX 95 billion. This is lower than 2019, where Stanbic Bank paid a dividend of UGX 2.15 per share, valued at UGX 110 billion.
DFCU Bank:
DFCU Bank proposed a dividend of UGX 50.33 per share, equivalent to UGX 37.7 billion for the year, which is 1.6 times higher than the profits recorded in 2019.
However, DFCU did not pay dividends to shareholders last year because of prudent advice from the central bank in the face of the looming pandemic. Additionally, DFCU saw its net profit drop by 68% from UGX 74.8 billion in 2019 to UGX 24 billion in 2020 due to increased provisions for loans and advances. Impairment of the financial asset includes the unrecovered loans DFCU took over from the Crane Bank in 2017.
The net loan loss provisions increased by 107% from UGX 14 billion in 2019 to UGX 30 billion in 2020, with higher than expected impairment charges on the financial assets. Further, there was an increase in an impairment charge on the financial support of UGX 50 billion in 2020, compared to UGX 10 billion the year before.
African Markets also reported that DFU saw a growth in the deposit base by 27% and an 18% increase in its asset base.
Stanbic Uganda Holdings (SUH): SUH sustained a reduction in net profits from UGX 259 billion to UGX 241.6 billion. SUH also saw impairment losses of UGX 91 billion, influenced by the pandemic. An impairment loss occurs when a bank is unlikely to collect a debt, including principal and interest.
The bank’s loans, however, tripled to UGX 48 billion. Non-performing loans and other assets showed an increase from UGX 183 billion to UGX 218.9 billion.
In addition, SUH’s customer deposits swelled from UGX 4.7 trillion to UGX 5.5 trillion. Net loans and advances increased by 26.8% as more customers borrowed money to secure their businesses. As for the quality of the total assets, SUH performed poorly because of the pandemic. The bank’s provisions for non-performing loans and doubtful debts increased by 110% to UGX 91.8 billion.
Bank of Uganda predicts the economy to grow by 3-3.5% in 2021 and 6% to 10% by 2023. However, this depends on;
- The management of COVID-19
- Growth in tourism
- Improvement in global investment and exports.
The Chief Executive of Stanbic Bank, Anne Juuko, explained that the bank would turn towards digital solutions to offer clients a more efficient banking experience. In addition, the bank is also committed to implementing social, economic, and environmental priorities.
“As a business, we remain optimistic about a faster recovery of the local economy on account of a successful national vaccine roll out program and a resilient business community.” expressed Mathia, Katamba, Managing Director and CEO of DFCU Bank.
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