Standard Chartered’s digital-first leap of faith begins paying off; bank bounces back to No.3 position Standard Charted Bank Uganda is a bank of many firsts. It is Uganda’s oldest bank- it was founded on 1st August 1912; 109 years ago. It was also the first Ugandan bank to introduce ATMs, the first VISA Electron debit card and toll-free phone banking amongst many other innovations. It is therefore not surprising that in February 2019, the bank was the first to go bold with its digital-first strategy; closing a number of branches and introducing a raft of online self-service platforms. The changes caused a slight disruption in the bank’s market position, but going by 2020’s results, it appears the decision to digitally leapfrog the industry is paying off big- and it is just the beginning.

Standard Chartered Bank Uganda (SCBU), a subsidiary of the out-of-London global banking giant, Standard Chartered Plc, has bounced back into the industry’s top three largest banks, according to its just-released 2020 results.

The results, published on April 30th 2021, show that SCBU regained its No.3 position in assets and deposits, which it lost to Absa Bank in 2019. It also maintained its third position on revenues.  

Assets grew by 21.5% from UGX3.2 trillion to UGX3.8 trillion, on account of a UGX 1.25 trillion lending book, increased cash and balances held with the central bank that grew from UGX347.2 billion to UGX627.7 billion as well as an increment in investment securities, from UGX685.9 billion to UGX820.6 billion.

Absa Bank Uganda is now in the fourth position with UGX3.5 billion in assets.

SCBU, also picked up 27.1% more deposits in 2020, growing its deposits portfolio from UGX2.13 trillion to UGX2.71 trillion- a growth of UGX578.6 billion, cementing its position as Uganda’s 3^rd largest deposits holder.   

Stanbic (UGX5.5 billion) and Centenary Bank (UGX3.14 trillion) are the first and second in deposits respectively.

However, due to a slowdown in the economy as a result of Covid, lending largely remained flat, with a slight 1.9% reduction, from UGX1.27 trillion in 2019 to UGX1.25 trillion.

With the slowdown in lending, coupled with several Covid-19 related loan restructuring as well as initiatives by the bank to waive digital transaction charges, the bank’s main income lines were impacted. For example, there was reduced interest income from lending activities from UGX257.4 billion in 2019 to UGX204.4 billion in 2020. Fees and commission income was also negatively impacted from UGX44.3 billion to UGX40.9 billion, as the bank waived most digital banking charges, to encourage contactless banking as a way of controlling the spread of Covid-19.

On a positive note for the bank and its wealth management clients, interest earnings from investment securities increased from UGX95.2 billion to UGX113.9 billion as well as forex income from UGX31.5 billion to UGX38.8 billion.ataköy escort

Overall, there was a 6.8% decline in total income from UGX461.2 billion in 2019 to UGX429.9bn.

Total expenditure also went up from UGX308.5 billion to UGX339.8 billion on the back of increased interest expenses on deposits and increased staff costs.

As a result, profits reduced by 41.6%, from UGX124.7 billion in 2019 to 72.8 billion in 2020. However, Standard Chartered remained among the top 5 most profitable banks – in the 4^th position after Stanbic (UGX241.7bn); Centenary Bank (UGX161.2 billion) and Bank of Baroda (UGX83.3 billion). Absa Bank is in the 5^th position with UGX40.7 billion in profit. 

Facts behind the figures: Digital investments begin to pay off

Commenting about the results, Albert Saltson, the Bank’s CEO and Managing Director, said the results were competitive as they were resilient, and the right step in the bank’s digital-first direction.

“Without any doubt, 2020 was a year of extraordinary global turbulence due to the Covid-19 pandemic. Throughout this tumultuous period, we focused on supporting our clients, ensuring the wellbeing of colleagues, and showing solidarity with our communities, all this while preserving our operational and financial resilience,” he said, in a commentary accompanying the results.

“Our 2020 financial performance was impacted in some respects by the effects of the pandemic, but we have remained resilient and competitive, despite the challenges, meaning that – even though our progress has slowed – we are on the right track,” he added.

Saltson said the bank would continue to leverage its global footprint and muscle, as well as its 109-year rich heritage in Uganda to drive prosperity for its customers and stakeholders, in line with its brand promise – Here for Good.  

Kelvin Musana, the Chief Financial Officer, said: “With our significant investments in technology, prudent cost and risk controls, robust systems, we remain optimistic, solid, competitive and are on the right track.”

He added that although the economic environment was still uncertain, 2021 was expected to be a better year. 

Godfrey Sebaana, Executive Director & Head, Corporate, Commercial and Institutional Banking said that in 2020, the bank continued to strengthen its capacity to serve both global subsidiaries of multinational companies as well as institutional service providers.

“Our strong and deep local presence across markets enables us to connect our clients multilaterally to investors, suppliers, buyers and sellers which enables them to move capital, manage risk, invest in more wealth, and help co-create bespoke financing solutions,” he said, adding: “The business continued to be a critical partner towards key impact- projects and giving thought leadership, especially for the key focus sectors. By leveraging on the global network presence, the business has also facilitated the tapping into key trade corridors especially the China/Africa Trade corridor and facilitating key infrastructure projects driven by bilateral development partners.”

Sebaana said that for example in 2020 Standard Chartered Bank, participated in financing key industrial projects in many of Uganda’s budding industries parks as well as financing key infrastructure and energy projects.

“Our corporate finance proposition has recorded a two-fold growth as we have – successfully delivered a wide range of solutions for our clients along with several complex event-based transactions,” he said of 2020.

Moses Rutahigwa, the Head, Consumer, Private and Business Banking also said that during 2020 the bank registered significant milestones, such as a 44% Income growth from Wealth management driven by a strong proposition of both local and offshore investment options for clients.

“There was an 86% growth in assets under management to UGX 297 billion. Wealth management is helping our clients diversify their investment portfolio and most importantly provide a secure financial base for their families and businesses in these turbulent times,” said Rutahigwa.

He also attributed the growth to an enhanced end-to-end digital offering that was creating an excellent customer experience. 

“New client numbers are now up 6 times in the last 2 years since the launch of our fully digital bank. More importantly, 75 per cent of these clients are below the age of 35, which is helping us to create a sustainable client flow,” he said.

As a result, the bank has seen massive usage of the digital platforms, with clients accessing up to 70 of the bank’s common services via SC Mobile- the bank’s banking app. 64% of these transactions are being processed straight through with no human intervention.

He also said that today, the bank’s agent banking channel launched in April 2020, was handling up to 25% of all the bank’s cash transaction, with tremendous month-on-month growth. 

The bank also reported increased adoption of its digital channels in the corporate banking category with close to 90% of clients migrating their transactions to Standard Chartered bank’s Straight2bank digital platform.

Standard Chartered Bank’s digital agenda has received massive industry recognition and accolades, such as the Best Consumer Digital Bank by Global Finance Magazine (2020) as well as the Best Digital Brand and the Digital Bank Excellence accolades at the Digital Impact Awards Africa. The bank was also recognized as Best Bank of the year 2020 in Uganda, by The Banker. It also won the Humanitarian Award from Uganda Red Cross for its various charity projects.

Becoming a better bank for all stakeholders

Saltson said that with the bank’s deliberate digital-first direction, launched in February 2019, taking shape and beginning to achieve the desired objectives, the bank was now more confident about 2021 and beyond.

“I expect 2021 to be a better year overall for the world and us. Even if uncertainties continue on several fronts, I envisage that the global economic recovery will strengthen as the year progresses. Our aim is not just to be a larger, leaner, more profitable and strongly capitalised bank, but a better one- better for our clients, our communities, our colleagues and our shareholders,” he said.