Absa Bank Uganda has this morning released its 2022 financial results, reporting growth in deposits, lending, revenues as well as net profit and assets.
The bank, a subsidiary of Absa Group, one of Africa’s largest financial services Groups announced that customer deposits in 2022, grew by UGX34.8 billion, from UGX2.42 trillion in 2021 to UGX2.46 trillion in 2022, a growth of 1.4%.
Deposits’ growth was on the back of an “increase in the active customer base as a result of new-to-bank acquisitions and reactivation of inactive accounts”.
“Additionally, there were increased customer engagements due to the capabilities built by the bank across its various alternate channels,” the bank said.
Increased deposits and resurgent credit demand, enabled lending to grow by 19.8% or UGX259.3 billion, from UGX1.31 trillion to UGX1.57 trillion.
Growth in lending and deposits, coupled with customer transactional activity led to a UGX46 billion or 12.5% growth in revenue. 2022 revenue growth was underpinned by a UGX27 billion growth in net interest income and a UGX19 billion growth in non-interest income.
Consequently, profit after tax grew by 28.9% or UGX31.7 billion, from UGX109.5 billion to UGX141.2 billion.
The bank attributed the growth in net profit to growth in revenue (12.5%) and a 94% drop in impairment charges as most of the bank’s customers reported post-Covid-19 resurgence. The bank also received repayments from some of its previously distressed borrowers.
All the above fundamentals combined, powered a UGX226.3 billion or 5.3% growth in total assets from UGX4 trillion in 2021 to UGX4.23 trillion.
The bank also reported healthy movements across key performance ratios. For example, the total capital ratio closed at 24.42% compared to the 17.28% regulatory limit. Return on equity went up to 21% from 18.9% the previous year, while the cost-to-income ratio went down to 56% from 58% in 2021.
The credit loss ratio also went down to 0.58% from 0.61% in 2021.
This is Mumba Kalifungwa’s 3rd year as the bank’s Managing Director since he was appointed Managing Director in April 2020, at the onset of the Covid-19 pandemic. Over and above steering the bank through the pandemic, he has been able to, through these three years, grow the bank’s deposits base, by 12.6% or UGX275.2 billion, from the UGX2.18 trillion he inherited (in 2019) to UGX2.46 trillion⏤a Compounded Annual Growth Rate (CAGR) of 4%. During this time, lending has grown by 17.5% or UGX233.1 billion, from UGX1.33 trillion to UGX1.57 trillion⏤ a CAGR of 5.5%.
Net profit bounced back from a 2020 decline (it dropped by 47.9% from UGX78.1 billion in 2019 to UGX40.7 billion in 2020), but has since been growing, to UGX109.5 billion in 2021 and UGX141.2 billion at the end of 2022- altogether a CAGR of 21.3% across 2019-2022.
Total assets, under Kalifungwa, have grown by 23.5% or UGX806.7 billion-, from UGX3.43 trillion in 2019 to UGX4.23 trillion⏤a CAGR of 7.3%.
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Commenting about the results, Mumba Kalifungwa, the bank’s Managing Director, said: “Despite an uncertain operating environment, I am pleased to report that it was a year of growth for us at Absa. This performance is underpinned by the resilience of Uganda’s economy which grew by 4.6% in the face of a global economic downturn and tighter financial conditions. We anchored our focus on supporting our customers to navigate these tough times”.
“We supported the economy’s growth trajectory, financing key sectors including agriculture, trade, construction and real estate and manufacturing. Our total lending to the agriculture sector currently stands at UGX158 billion, reflecting a growth of 40% from 2021; trade at UGX306 billion growing by 25% from 2021 and manufacturing at UGX196 billion growing by 14% from the previous year,” Kalifungwa added.
Nadine Byarugaba, the bank’s Chairperson, said the bank remained strong and steadfast “having strengthened our ability to operate in a constantly evolving local, regional and global environment, and to leverage this strength to make a positive difference in the lives of our customers, colleagues and the nation of Uganda as a whole”.
“Beyond the numbers, we also stayed true to our commitment to being an active force for good in the communities within which we operate, focusing on four areas (education and skills development, inclusive financing, promoting a just society and environmental sustainability) under the guidance of our holistic Environmental, Social and Governance ambitions,” she said.
Being a force for good through sustainable initiatives
Some of the key sustainable investments highlighted by the bank was a UGX142 billion loan portfolio to support local content initiatives in the country in the areas of waste management, construction, and transportation.
In a bid to promote easy access to land and housing, Absa partnered with Bakaima Real Estate Agents to introduce land purchase loans of up to UGX 500 million with payment periods of up to 10 years at affordable interest rates. To enable businesses, especially SMEs in the post-Covid-19 recovery, the bank said it rolled out preferential financing to support SMEs with up to UGX100 million in unsecured loans and up to UGX500 million in unsecured bid bonds.
To help increase the uptake of insurance in Uganda, Absa partnered with Prudential Uganda to launch the Absa Family Protection Plan – a life insurance policy designed to help families plan for the financial needs faced during the loss of a loved one.
The bank also said it paid UGX90.5 billion in total taxes.
On the corporate giving front Absa said it invested in various social initiatives including UGX60 million donated to the Uganda Red Cross Society (URCS) for the purchase of relief items to support families that were displaced by flash floods in Eastern Uganda. Absa also donated over UGX131 million worth of IT equipment to the Uganda Police Training School resource centre at Kabalye, Masindi.
Through the Absa Women’s Network Forum (WNF) bank staff initiated a journey to skill over 500 teenage mothers and women from the Central, West Nile and Albertine regions of the country in financial literacy and personal development skills for employment and business creation. Absa female staff, also handed over 20 laptops to Wakisa Ministries and TERREWODE to enable beneficiaries at the centres to sign up for and benefit from the bank’s ReadytoWork programme.