— Stanbic Bank Uganda (@stanbicug) April 15, 2016
According to the World Bank Africa Pulse Report released earlier this month, growth prospects for Sub-Saharan Africa reduced to 3.0% in 2015 from 4.5% in 2014. The analysis shows that the slowdown came amidst a sharp drop in global commodity prices, weak global growth that was underpinned by a slowing of growth in emerging market economies, including China, and volatile financial markets.
On the local front, BoU implemented a tight inflation targeting policy by raising the Central Bank Rate (CBR) five times in 2015 from a low of 11% in January 2015 to end the year at 17% with the result that prime lending rates shot up to 25% by the close of 2015.
Sam Mwogeza, the Stanbic chief financial officer, suggested that they deserve some commendation for posting a strong” return on equity (“RoE”) of 29%, which has led the board to recommend a dividend of Shs 0.78 per share this year, which he said “still represents a solid dividend pay-out.”
Why are shareholders going to share a dividend of only Shs 40 billion from an annual profit of Shs 150.8 billion? The officials explained that the Shs 110 billion would go into a capital conservation buffer, which is a new requirement by the Central bank for Domestic Systemically Important Bank (DSIB) such as Stanbic. Under new regulations, every DSIB must be strong enough to avoid a situation whereby it
would require government bailouts in case of a financial crisis. It is anticipated that these regulatory changes will take effect in 2016. Generally, the bank’s total assets grew by 6% to Shs 3.7 trillion up from
Shs 3.24 trillion in 2013, a clear indication that the shareholders should not have any doubt that the value of their investment is continuing to grow.