As most banks in 2021 significantly slowed down and cut bank extension of the much-needed credit, Housing Finance Bank, stuck to its mandate of enabling homeownership and financial independence, growing its lending by 22.5% which in turn drove a record performance.
According to the just-released 2021 financial results, the bank reported it extended UGX 674.3 billion in loans to especially key sectors that among others, include the real estate value chain, trade, agriculture, household and manufacturing. This is UGX123.7 billion more than the UGX 550.6 billion it lent out in 2020- an increase of 22.5% nearly 4 times the industry’s 6% growth levels in 2021.
As a result, the bank which in 2022 held on its market position as the country’s 9th largest lender, out of the licensed 26 banks, increased its credit market share from 3.4% to 3.9%.
Resulting from increased lending, total income increased by 26.6% from UGX151.3 billion to UGX191.5 billion underpinned by a solid UGX108.1 billion interest revenue from lending activities.
Growth in lending was supported by an equally strong double-digit growth rate in deposits- 25% (above the industry 4.7% growth rate) from UGX654.2 billion in 2020 to UGX818 billion in 2021- growth of UGX163.8 billion.
This in line with the bank’s stable 5-year compounded annual growth rate in customer deposits of 16.6%.
Strong lending, deposits and income performance, combined with prudent cost management (expenditure only grew 12%, from UGX126.1 billion in 2020 to UGX141.3 billion in 2021), led to a 98% growth in net profit from UGX20.7 billion to a record UGX41 billion!
This the highest ever profit for the bank in its 55 years of existence and is consistent with the bank’s 5-year compounded annual growth rate in profit of 15.4%.
With the record performance, the bank increased its industry market share of profitability, from 2.5% to 3.8% further solidifying its position as Uganda’s 8th most profitable bank.
Seven of the twenty-six banks in Uganda made losses in 2021.
With this performance, the bank strengthened its balance sheet position, further buttressing its position as Uganda’s 10th largest bank by assets, up from the 12th position in 2017.
HFB’s assets in 2021 grew by 17.7%, from UGX1.108 trillion to UGX1.304 trillion- an increase of UGX196.2 billion, increasing the bank’s assets market share from 2.9% to 3.1%.
Over the last 5 years- assets have nearly doubled, growing by 1.8 times (78%) from UGX732.7 billion to UGX1.304 trillion- a CAGR of 12.2%. Much of this growth has happened under the watch of Michael Karokora Mugabi, who in November 2018 was elevated from Executive Director to the Managing Director role.
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Commenting about the results, Mr. Michael K. Mugabi the Managing Director said that the 2021 results highlight the bank’s contribution to Uganda’s “economic recovery efforts through tailored interventions for Uganda’s critical sectors.”
“Although the first two quarters of 2021 were challenging for the banking industry and the entire economy at large due to the COVID-19 pandemic, we demonstrated resilience by bouncing back and extending credit to the pivotal sectors of our economy,” remarked Mr. Mugabi.
“Our loan book grew by over UGX123 billion, with loans extended to customers in the real estate value chain, trade, agriculture, household, and manufacturing sectors. Our customer-focused initiatives continued to support corporate entities in business while promoting employment and fostering livelihood for sustained economic growth and development,” he added saying that the solid performance was fortified by a strong commitment to remaining the most preferred consumer and business bank with a focus on housing finance.
“We remain resolute in reaching out to more customers with focused value propositions across all aspects of life including housing, business, education, agriculture and infrastructure developments for the social and economic development of our country,” said Mr. Mugabi.
Mr. David G. Opiokello, the Chairperson, Board of Directors said that 2021 was a significant one for the bank, as it marked the mid-point for the bank’s 5-year strategy, launched in 2019 and the good performance exhibited in 2021 demonstrated a bank that “remained resolute in delivering on its promise to the customer through tailored solutions, credit relief plans and recovery packages.”
“The Bank in 2021 also focused on improving its digital footprint to extend convenient and contactless banking services to our growing customer base. We have also reinforced our mortgage value offering with the inclusion of incremental housing loans for the affordable income segment,” he said.
Commitment to growth and leveraging the digital agenda to promote financial inclusion
Mr. Okello further said that to ensure that HFB continues to reach out with inclusive services, the shareholders – the Government of Uganda, the National Social Security Fund, and the National Housing and Construction Company continued to strengthen the Bank’s capital base, even amidst turbulent times, which investment would be focused on fortifying the bank’s key business segments, as well as continue investing in its digital agenda.
On the bank’s outlook, Mugabi said that he was very optimistic about the future especially following the full reopening of the economy, the stable macroeconomic conditions and the Government of Uganda’s strong commitment to improving public infrastructure and fostering private sector-led growth.
“The future presents a growing array of opportunities for expanding the role of Housing Finance Bank in Uganda’s economic transformation. We, therefore, reaffirm the Bank’s commitment to supporting the country’s growth strategies aligned to this transformation journey,” Mugabi explained.
“Our footprint in key sectors including housing, agriculture, manufacturing, education, health, trade, tourism and industry continues to support livelihood through increased productivity, export earnings, employment and a wider tax base. As one of the leading financial services providers in the country, the Bank continues to work with key partners in the public and private sector space, with the objective of supporting development initiatives aimed at transforming the economy to the middle-income status,” reiterated Mr. Okello, the board Chairman.
