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It shrugged off the effects of COVID-19 to nearly double net profit to Shs83bn
Kampala, Uganda | JULIUS BUSINGE | Bank of Baroda Uganda has reported a sharp growth in annual profits, as earnings from loans, foreign exchange and market securities helped to offset the hit from the low interest rates meant to stimulate the economy during the COVID-19 pandemic.
The bank reported a net profit to Shs83.3bn for the year ended Dec.31, 2020, compared with Shs 45.3billion recorded in the previous year.
This is contrary to other banks such as Stanbic and dfcu that have reported reduction in profits largely because of the negative impact caused by COVID-19 restrictions on economic activities.
Stanbic Uganda Holdings (SUH) recorded a 6.9% drop in net profits from Shs 259billion to Shs241.6illion as the lender saw impairment losses more than double during the same period under review occasioned by the COVID-19 pandemic.
Similarly, dfcu saw its net profit significantly drop by 68% to Shs24 billion in 2020 due to increase in provisions for loans and advances, and impairment of the financial asset.
Bank of Baroda’s executives – Prithvi Singh Bhati, Raj Kumar Meena, and Vastina Rukimirana Nsanze – said the bank recorded substantial growth in almost all the business parameters amidst the pandemic and a competitive business environment.
They added that the performance was also supported by the bank’s good customer centric approach and leveraging on technology for enhancing service delivery across its branches.
In order to leverage the technology further, the bank has replaced seven ATMs with cash recycler machines to provide customers with facility of 24/7 cash withdrawal as well as cash deposit facilities.
According to the financials, the bank’s total income increased from Shs199bn in 2019 to Shs207bn in 2020.
Profitability was boosted by earnings from fees and commission which increased from Shs15.6bn to Shs16.3bn in 2019 and 2020 respectively.
Another boost was caused by interest on loans and advances that grew from Shs87.4bn to Shs89.5bn in the period under review.
Interest on marketable/trading securities increased from Shs17.8bn to Shs25.8bn as earnings on foreign exchange grew from Shs3.5bn to Shs4.4bn in the same period under review.
Meanwhile, interest on deposits and placements reduced from Shs13.1bn to Shs12.7bn and so did the interest on investments that reduced from Shs44.1bn to Shs42.2bn.
Total expenditure declined from Shs129.6bn to Shs99.5bn – boosted by among other things, a reduction in interest expense on deposits from Shs61bn in 2019 to Shs57bn in 2020.
The non-performing loans increased from Shs10.1bn to Shs11.7bn; bad debts written off declined from Shs33bn to Shs205million. Total assets increased by 14.04% to Shs2.1tn.
Executives said, the bank constantly strives to adopt the latest technology to improve operational excellence, increase efficiency and to create competitive advantage.
Like 2020, executives said, future performance is being anchored on value addition by employees, customer retention and shareholders for their continuous support and patronage.
In the same line, the executives said, the bank will soon be launching agency banking and, will initiate a new experience of doorstep banking through tablets.
The executives added that the year 2020 was an important milestone on “our path as our bank was bestowed with ‘People’s choice Quality Awards 2020’ for being Best Competent and Consistent Bank in Uganda.”
The Bank was also conferred with “Superbrands of East Africa” for Consecutive 6th term.
Shs25bn dividends
The board has resolved to recommend dividend of Sh25bn for the year ended December 31, 2020, translating into Sh10 per share.
The proposal for paying dividend at Sh10 per share (100%) will be subject to approval from Bank of Uganda and by the shareholders at the ensuing Annual General Meeting.
The book closure date will be advised following receipt of the said regulatory approval, according to the bank’s top management.
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