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Mixed Fortunes As Banks Release 2017 Financials

Bank of Uganda Headquarters

Kampala, Uganda | THE INDEPENDENT | Commercial banks have recorded a mixed bag of fortunes over the last one year, according to financial reports released today. The financial results released today show a decline in profits for some banks and microfinance deposit-taking institutions and losses for others.

Banks that reported losses in 2017 include Commercial Bank of Africa (1.2 billion shillings), Cairo International Bank (1.1 billion Shillings), and Top Finance Bank (4.2 billion Shillings).

Banks that reported profits are Standard Chartered Bank (106 billion Shillings, down from 128 billion Shillings in 2016), EcoBank (1.5 billion Shillings, up from 813 million Shillings in 2016), Equity Bank (29.2 billion Shillings, up from 17.1 billion Shillings in 2016) and Bank of India (3.5 billion Shillings, up from 2.3 billion Shillings in 2016).

The Bank of India results, which shows a profit of 3.5 billion Shillings, is particularly significant since a rumour spread early this year that it was on the rocks.

Other banks that posted increasing profits include Pride Microfinance Limited, whose total comprehensive income grew to 16.4 billion Shillings, up from 15 billion Shillings in 2016, Post Bank 6.2 billion Shillings from five billion Shillings in 2016.

Banks whose profits reduced but never made losses include Tropical Bank, which made a profit of 41.1 billion Shillings, down from 43.9 billion Shillings in 2016 and FINCA, which made 530 million Shillings, down from 5.7 billion Shillings in 2016.

Commenting on the Standard Chartered Bank results, the Chief Executive Officer, Albert Saltson, said they set out on a strategy designed to reposition the business for success with three strategic objectives: to secure foundations, get lean and invest and innovate.

Saltson said in 2017, Standard Chartered Bank’s focus remained on building a strong balance sheet supported by a strong focus on client experience through various client engagements.

Uganda has 24 operating commercial banks and five microfinance deposit-taking financial institutions, many of which are yet to publish their financials. But it’s not yet clear why a number of banks have reported losses, considering that the percentage of non-performing loans declined in 2017 compared to 2016.

The Bank of Uganda (BoU), in its Monetary Policy Report for February 2018 says the risk of non-performing loans (NPLs) to private sector credit growth moderated following the decline in the ratio of NPLs to 5.6 per cent in December 2017, from 7.2 per cent in the preceding quarter ended September 2017.

The BoU says the decline in NPLs reflects commercial banks’ deliberate effort to improve their asset quality.

The report adds that NPLs dropped most significantly in the manufacturing sector while mining, quarrying and agriculture remain the sectors with the highest NPLs.

According to the report, the weighted average lending rate on shilling denominated loans declined to 20.2 percent in the quarter ended December 2017, from 21.4 percent in the preceding quarter.

The BoU report notes that growth in private sector credit remains relatively subdued, but is expected to strengthen given sustained monetary policy easing.

The benchmark Central Bank Rate (CBR), which is a signal rate for inter-bank and private sector lending is at nine percent, the lowest ever since the central bank adopted the current monetary policy stance of inflation targeting lite.


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