Stanbic Bank profits fall as COVID-19 hit

The lender recorded a 4.9% drop in net profit to Shs127.4billion

Kampala, Uganda | ISAAC KHISA | Stanbic Bank has suffered a 4.9% drop in pre-tax profit in the first half of the year as credit impairment charge and coronavirus disruption takes toll on the country’s largest commercial lender.

The bank reported profits of Shs127.4bn in the half year to June30, down from Shs134bn in the same period in 2019.

It has however shown a significant resilience amidst the current pandemic, with the Uganda Securities Exchange listed shares oscillating between Shs24 and Shs26 per share since the beginning of the year.

Anne Juuko, the Bank’s chief executive officer said the bank’s performance amid the difficult operating environment shows its resilience and commitment to implementing a robust strategy in the current economic conditions.

She said the bank offered credit relief programmes to business and personal customers tailored to suit their circumstances as they battled the pandemic.

“Our aim was to ensure that we see that their businesses are sustained and the impact on the economy is minimised,” she said.

“Over 60% of the loans restructured in the Stanbic’s portfolio have been to SMEs and we shall continue to create further interventions to help businesses recover from the impact of the pandemic.”

Though Juuko could not state how much credit the bank  restructured, available statistics from Uganda Bankers Association that consist of more than 25 banks and other financial institutions,  shows that the overall banking industry has restructured loans worth Shs4.5trillion since April this year.

Stanbic’s loans and advances grew by 24% from Shs2.7trillion to Shs3.4trillion during the same period under review. Customer deposits, too, increased by 26.6% from Shs4.1trillion to Shs5.2trillion as customers preferred to save their incomes as a result of the uncertain future.

At the same time, the bank’s total assets grew by 26.5% from Shs6.1trillion in 2019 to Shs7.7trillion in 2020.

The bank, however, reduced its prime lending rate to 16%, the lowest in the country’s banking industry, in response to the Bank of Uganda’s recent decisions to lower the Central Bank Rate.

The BoU has lowered the CBR rate from 9% in January to 7% at the moment, as a measure to encourage borrowing and stimulate the economy that has largely been battered by COVID-19 lockdown measures since March this year.

Bank sets up subsidiaries

Patrick Mweheire, the Chief Executive Stanbic Uganda Holdings Ltd and the regional chief executive for Standard Bank Group, said SUHL has made great strides in achieving the strategic objectives as set out in 2018 of creating the opportunity for Stanbic to venture into the other non-banking services that would enhance the value of products and services to customers.

He said SUHL successfully established two new subsidiaries – Stanbic Properties Uganda Ltd, that will hold and manage the real estate portfolio, and Stanbic Business Incubator, that will manage business enterprise development on behalf of the holding company and its subsidiaries.

“We expect to have two other subsidiaries as the first phase of additions which will include a stock brokerage subsidiary that will increase the suit of financial services offered to stanbic clients and the financial technology subsidiary which is expected to advance Stanbic digital agenda,” he said.

The future

Going forward, Juuko said the pandemic has presented an opportunity for the bank to reshape the way it delivers services to customers as the economy continues to recover following the government decision to ease the lockdown restrictions.

“We shall continue to accelerate our digitalization agenda to ensure we continue to provide more innovative and efficient banking services to our clients,” she said.

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