FORCE OF GOOD: Absa posts UGX41 billion profit, despite restructuring UGX260 bn loans and increased Covid-19 and rebranding costs Mumba Kalifungwa, Absa Uganda’s Managing Director, had all his 2020 odds, seemingly stacked against him. He took up office on 1st April 2020, just as the country was entering into total lockdown. For the Zambian banker, whose last posting had been as CFO in Botswana, this was his first time as Managing Director and in a new market. But that is not all. His bank was rebranding from the Barclays brand that Ugandans had known for over 90 years, to a new Absa brand. But going by the 2020 results, it looks like he just passed the test with flying colours, and the board Chairperson, Nadine Byarugaba, agrees.

Absa Bank Uganda, yesterday, 20^th April 2021, released their 2020 annual results, reporting a profit of UGX41 billion and growth in revenue to UGX316 billion.

This is Mumba Kalifungwa’s first results, since he became Managing Director/Chief Executive Officer in April 2020, just about the time the country was entering into total Covid-19 lockdown.

Speaking during a media briefing, held at Sheraton Kampala Hotel, Mr Kalifungwa said that the good results were born out of the bank’s demonstrated ability and commitment to stay by the customers’ side, even during the pandemic.

“We achieved total revenue of UGX 316 billion and profit after tax of UGX 41 billion. This resilient performance was underpinned by growth in net interest income, demonstrating our continued commitment to meet customers’ needs in bringing their possibilities to life,” he said.

This performance was itself powered by growth in lending. 

“Despite the industry decline in lending, our gross loan book grew to UGX1.5 trillion maintaining a three-year compounded annual growth rate of 9.6%, mainly driven by our commitment to support our customers’ credit needs. We remain committed to providing financing to the economy to facilitate trade, commerce and capital formulation for business growth,” Mr. Kalifungwa stated.

Customer deposits also grew by 8.1% from UGX2.18 trillion in 2019 to UGX2.35 trillion- a growth of UGX176.7 billion.

The bank said, despite the need to accelerate technology investments to maintain a seamless and painless customer experience during the pandemic, as well as the costs of the transition from the Barclays to the Absa brand, costs remained well-controlled with a 4.9% growth year-on-year, in line with core inflation for the year ended December 2020.  

“The COVID-19 pandemic necessitated an accelerated investment in digital platforms to ensure business continuity in light of the measures that were introduced to curb the spread of the pandemic. We have prioritized investment in innovation as we seek to leverage the strength of digital technology to create seamless experiences for our customers and consequently, realize our ambition to become a digitally-led bank,” Kalifungwa said.

Segwaya Michael, the bank’s Chief Finance Officer and Executive Director said that overall, Absa remained a strong bank, ready to support its customers achieve their dreams.   

“Amidst the resilience and challenges of 2020, our capital position came out very strong, at 23%. The bank remains well-capitalized way above the regulatory requirement of 12.5%. This means we’re able to take on new deals. We are even prepared to take on what is coming through the oil industry,” Segwaya said. 

Absa restructures UGX260 billion in Covid-19 affected loans

Kalifungwa said, that as anticipated, the pandemic impacted the bank’s customers’ ability to meet their credit obligations making it necessary for Absa to increase its impairment provisions.

“In line with the Bank of Uganda COVID relief measures, we provided credit relief support to 1,437 customers in economic distress to help them navigate the challenges brought on by the pandemic,” Mr. Kalifungwa added.

Of the restructured loans, 1,378 were for retail clients, worth some UGX40.1 bn while 59 were wholesale, worth UGX219.4 bn.
Thanks to this timely intervention, the bank said, that by the end of December 2020, more than 93% of the clients who sought repayment holidays, are back on track and servicing their loans normally.
Only a few, especially in the services, tourism and education sectors have asked for another extension beyond March 2021.

“I would also like to specially commend our CEO, Mr Mumba, over what he has achieved, over the past one year.  He was appointed on the first of April, at the time the country was grappling with the pandemic and the measures that were being instituted by the government in response,” she said.

“It is said the true test of a leader is not how one leads in good times, but rather how they are able to adjust and navigate during the tough times of crisis. As a board, were are proud of your response to the crisis. Working closely with your teams to ensure that the bank provided an adequate and timely response to the pandemic; putting in place the necessary measures to ensure business continuity, a positive customer experience and safety protocols for staff, customers and the community,” she added.

Nadine said the 2020 results reinforced the bank’s commitment to being a force of good.

“I would like to assure you that the bank is sound and well-positioned as one of the leading banks in the country. This is especially commendable considering that the bank only completed the separation process- from Barclays in 2020,” she said, adding: “We are now in a position to move to the next level and provide our customers with the best services that we are renowned for in the world. Similarly, the Board of Directors is committed to ensuring robust governance, customer focus and sustainability of the bank’s operations.”