Supported by earnings on deposits, loans, fees and commission
Kampala, Uganda | JULIUS BUSINGE | Tier II lender, PostBank Uganda has reported an increase in profit after tax from Shs8.3bn in 2019 to Shs10bn in 2020 amidst the COVID-19 pandemic crisis.
According to its financial results released on May 03, this performance was penned from earnings from interest on deposits which grew from Shs5.8bn to Shs10.3bn.
Other supporting income areas include; earnings from loans and advances which increased from Shs72bn to Shs77.3bn; interest on investment securities which grew from Shs1.7bn to Shs3.3bn in 2019 and 2020 respectively.
Earnings from foreign exchange went up from Shs826m to Shs1bn in 2019 and 2020 respectively. However, fees and commission income declined from Shs26.1bn to Shs25.2bn during the period under review.
The bank grew its customer base by 29% during the period under review, and increased its total assets by 38% citing improvement in customer service, efficiency of operations and rollout of alternative delivery channels.
The bank’s total assets grew by 38% to Shs675bn; customer deposits increased by 29% to Shs449bn as loans and advances to customers grew by 25% to Shs335bn. The bank’s comprehensive income for the year amounted to Shs10.7bn.
The bank also grew its capital base from Shs79.9bn in 2019 to Shs91.8bn in 2020 as it also recorded an increase in supplementary capital from Shs6.1bn to Shs6.6bn in the same period under review.
On a negative, total expenditure grew from Shs96.9bn in 2019 to Shs104bn in 2020 caused by an increase in interest expense on deposits from Shs8.9bn to Shs10.7bn and interest expense on borrowings from Shs1.8bn to Shs2.1bn in 2019 and 2020 respectively. Other interest expense (undisclosed) jumped from Shs1.2bn in 2019 to Shs5.3bn in 2020.
Similarly, provisions for bad and doubtful debts increased from Shs17bn in 2019 to Shs6.2bn in 2020 while operating expenses almost remained flat from Shs31.6bn in 2019 to Shs31.5bn in 2020.
The Bank paid more tax to government amounting to Shs5.1bn in 2020 compared to Shs4.2bn in 2019.
Meanwhile, non-performing loans and other assets increased from Shs10.3bn to Shs12bn while bad debts written off slightly went up from Shs4.1bn in 2019 to Shs4.5bn in 2020.
Insider loan exposers increased from Shs14.3bn in 2019 to Shs16.3bn in 2020.
Upward trend curve
The Bank in 2018 recorded a dip in its profit after tax of Shs3.4bn compared to Shs6.2bn in 2017 and Shs5bn in 2016.
However, loans and advances have been on a positive trend curve since 2016 when it recorded Shs180bn; Shs209bn in 2017; Shs252bn in 2018; Shs267bn in 2019 and Shs334bn in 2020.
The same trend is reported in the asset growth; Shs331bn (2016); Shs364bn (2017); Shs397bn (2018); Shs490bn (2019) and Shs674bn (2020).
Customer deposits have grown from Shs246bn in 2016, to Shs272bn in 2017, Shs294bn in 2018; Shs347bn in 2019 and then to Shs448bn in 2020.
Julius Kakeeto, the managing director at Post Bank Uganda said as 100% government owned bank, the lender has fully embraced the government of Uganda’s National Development Plan III (2020/21-2024/25) agenda of increasing household incomes and improving the quality of life as espoused by offering affordable and sustainable financing to micro-small and medium enterprises, many of whom are financially excluded by the commercial driven private sector players.
PostBank works together with Uganda Development Bank to offer development related loans among other government financial related services. That could have supported the good performance recorded in 2020 and years before.
“The year 2020 was challenging for most businesses, owing to the unprecedented pandemic whose impact remains evident worldwide,” Kakeeto said, adding that the Bank’s resilience was tested by the uncertainty occasioned by the COVID-19 pandemic.
Kakeeto said, the bank is now committed to continuing its support to the micro, small and medium enterprises and the agriculture sector of the economy which are vital to economically transforming lives and livelihoods of Ugandans.