A spillover from 2012 is continuing to affect the performance of Uganda’s largest bank, Stanbic, after it posted a 1.7 percent decline in net profits in the first six months of 2013. The profitability declined to Ushs 57.3bn from UShs 58.3bn during the same period in 2012. In 2012, the bank lost ground as Uganda’s most profitable bank due to reduced income, a rise in bad debts and write offs , and lower loan uptake.
In the first half of 2013, the problems for the bank have persisted as it realized a 27.6 percent decline in interest income to Ushs 137bn, which was as a result of reduced lending to customers. Loans to customers decreased by 7.7 percent to Ushs 1.36 trillion, meaning the bank earned much less interest a treasure trove for commercial banks. Also, total operating income including non interest income also declined by 10 percent to Ushs 225.9bn.
“At a macro level, weak credit consumer demand and liquidity challenges faced by government have resulted in industry wide drop in the balance sheet metrics mentioned (loans & deposits). Additionally margin compression due to large drop in rates compared to last year coupled with the drop in the loan book resulted in the drop of interest income,
