Uganda’s banking sector looks brighter

Kampala, Uganda | ISAAC KHISA | The country’s banking industry recorded a sluggish profit growth in 2017 but it projects a positive outlook a head. Fabian Kasi, the managing director of Centenary Bank spoke to The Independent’s Isaac Khisa about the industry’s growth prospects.

Ashead of one of the country’s biggest banks in this country, you certainly follow sector performance so keenly. What is the outlook for the banking industry?

Overall, I envisage the banking sector to flourish and this will be supported by the government infrastructure agenda that will see the creation of new businesses and new jobs that will translate into businesses for Banks. So, the future looks positive for the Banking industry.

Since the beginning of this year, theCentral Bank has lowered the Central Bank Rate to the lowest level ever but commercial banks are yet to follow suit. What explains this situation?

It is important to note that interest rates charged by commercial banks are determined by other factors besides the CRB. One of them is regarding the cost incurred by banks to borrow funds and make them available for borrowing customers. If banks borrow funds at a high cost, they may charge high interest.The other is the operating costs that banks incur when providing services to customers such as overheads, utilities, third parties, among others. Lastly, the risk involved in lending to customers also comes into play especially where recovery is involved.I think commercial banks have responded well to the Central Bank call of lowering interest rates as way of boosting private sector lending.

Last year, your institution registered a Shs.9.9bn reduction in net profit to Shs100.3bn. What came into your mind? What strategies have you taken to reverse that trend?

Generally speaking, the industry exercisedsome caution in lending due the high default rates suffered in 2016;however, 2017 saw some improvement on this front.

This had a negative impact on our bank’s profitability as well as the heavy investments in Information Technology infrastructure. We have started realising the benefits of the new IT platforms we have put in place and the strategy is to leverage on this technology to deliver excellent customer service,which will in turn translate into more revenue.

It is nearly coming to a decade since you were appointed as MD for Centenary Bank. What would you say are your remarkable achievements?

I am happy to note that the success the bank has recorded over the years has not been as a result of one man. It has been based on the team and institutional effort. As a leader, my role is to steer the ship to the right direction and with the help of my management team and the board of directors.

Together with the team, we have managed to move the bottom line profit from double a digit, which was ranging around of Shs 30 billion to 3-digit profitability of above Shs 100 billion. This is remarkable and it has been mainly attributed to the robust balance growth which crossed a trillion shilling mark during my time in office.

With 73 branches and 176 ATMs, Centenary Bank currently has one of the biggest branch and ATM networks in Uganda and the bank boasts of a customer base of close to 1.6 million customers, about 25 per cent of the market share.

In terms of the volumes of loans, we are giving out Shs1.3 trillion which is 11 per cent of the total amount of money the banking public sector is giving out in loans to people. Finally, in terms of deposits, we have mobilized about Shs1.7 trillion, which is 12 per cent of the total market out there.

We have managed to leverage technology in order to serve our customers better. This year the bank rolled out the new CenteVisa Debit card to give our customers more payment options and increased access to their fund world over. We continue with a drive to promote financial inclusion and this has been boosted by introducing Agent Banking services.

In a bid to enhance financial inclusion that so far has a huge gap, you unveiled Cente Mobile Loan. How is this product performing?

This product is performing fairly well. Customers are borrowing funds in big numbers on a daily basis to cater for their emergency needs since this is what the product was designed to address.

A section of the economic experts have argued that the financial institution’s move to venture into micro-loans is to simply make the population poorer because the interest rates are quite high compared with the usual loans. What is comment on this?

Micro loans have played a key role in transforming the lives of the people at the bottom of the pyramid, and this evident. For example, looking at the testimonies given by most of the micro finance customers, they have managed to improve their businesses, homes and farms for those engaged in agriculture.

Our bank in particular has thousands of repeat customers, those who borrow the second, third and in some cases a fourth or more times. If the bank was making them poor, they would not return to borrow.

I think micro-finance has instead made it easy for all people at all levels to access financial services and improve their well-being. It should be noted that customers sometime need some skills in order to invest wisely the money they are loaned, this way they will appreciate the benefits of the loans. We always offer free financial literacy services to our customers to help them make better investment and business decisions.

You manage one of the largest indigenous commercial bank in this country and this requires a lot of time and skills. How do you ensure work-life balance?

I diarise all my annual activities including things that may be considered small. With this, I try to strike a balance between work and my personal life, since am able to keep track of all activities. Secondly, I find time to work out so that I remain healthy and alert.