INTERVIEW: Patrick Mweheire tells the facts behind Stanbic’s record UGX259bn (USD67.1 mn) in profit. Stanbic Uganda Holdings Limited, have announced their 2019 financial results, declaring a 20% growth in net profit, from UGX215 billion in 2018 to a record UGX259 billion in 2019. This was on the back of a 20% year-on-year growth in revenue to exceed UGX 800 billion. This was on the back of a 14% growth in lending from UGX2.5 trillion to UGX2.8 trillion. In this interview, Patrick Mweheire, the Chief Executive Office for both Stanbic Uganda Holdings and Stanbic Bank Uganda in 2019, in whose reign the bank’s size and profitability grew from UGX3.5 trillion to UGX6.6 trillion and UGX135 billion to UGX259 billion respectively, gives key insights about the 2019 performance.

We delivered another great performance and were able to improve on all our key performance goals. We grew our deposits by 21% as more customers trusted us with their money and our loans & advances grew by 14% by – availing UGX 344 billion of new credit to key sectors of the economy such as manufacturing, agriculture and personal lending – where we provided more than 40% of new lending. Our revenues grew 20% year-on-year to exceed UGX 800 billion and were well-diversified between lending and non-lending revenue. As a result, our profit after tax grew 20% to a record UGX 259 billion over UGX 215 billion posted in 2018.

We ultimately achieved a cost to income ratio of 49%; indicative of the solid operating leverage in the business. Risk was well managed along with key risk types with a final credit loss ratio of 1.5%. The bank’s total assets also grew by 23% or UGX 1.3 trillion to exceed UGX 6.6 trillion at the close of the year – stronger positioning us to support larger infrastructure projects and better facilitate inclusive economic growth in the country. In the end, we were able to fulfill happiness for our clients, employees, and stakeholders and we were able to achieve all of this with the second-lowest prime lending rate across the banking sector.

What is Stanbic doing differently to meet the client’s needs?

Due to our obsession with the customer or client, we are consistently innovating to enhance their experience. In 2019, we delivered on several customer initiatives such as online account opening, mobile lending, enhanced agent banking, cash deposit machines which remain available 24/7 and can take up to UGX 700 million in a single deposit. We also massively invested in technology by further enhancing our core banking system and several other peripheral systems such as internet banking and business on-line banking. As a result over 85% of all the bank’s transactions are now executed digitally – branches are less than 15% from 40% less than 3 years ago. All of this digitization has allowed us to put banking back into the hands of the customer wherever and whenever they want.

With an excess of 1,700 active agents across the country, agent banking has demystified the brick and mortar preposition and created a win-win for the banks and clients. We are now able to provide the unthinkable a few years ago and increase our customer touch points in a cost-effective manner. It has brought about deeper financial inclusion and allowed more unbanked Ugandans into the formal banking sector.

We have been considerably encouraged by our client revenue year-on-year growth of 17% in 2019 – a real testament of our client connectiveness and empathy. These things do not happen randomly. We genuinely believe that focusing all your energy and investment into the client experience is the strategic differentiator and the rest will follow.

What are the key challenges the financial sector is facing and how are you addressing them?

The quintessential challenge remains the high cost of doing business. No sustainable business or industry can have its cost growth massively exceed revenue growth for an extended period. Unfortunately, with a cost to income ratio of 72% across the sector as opposed to a global average of 55%, we have a lot of work to do on banking efficiency in Uganda. We can achieve some of this through collaboration amongst the financial services sector but also through a much-needed regulatory refresh.

Banking is the oldest and most conservative sector in the world but is being disrupted and needs to acknowledge that. How can we use regulatory best practices in more successful regimes to make us more efficient as an industry locally? How can we co-exist and thrive with the Telco’s and mobile money?

We always have the macro indicators to manage especially as we get into an election year. I expect more credit pressure and the rise of non-performing loans to increase from its pre-cycle number of 4.7%. However, there seems to be room to manoeuvre given where inflation and base rates are, this time.

How has Stanbic Bank contributed to broader society as a good corporate citizen?

I am glad you asked – as that’s a passion of mine. I am constantly thinking of ways in which the private sector can leverage its platform and resources to solve national issues. We should and can be bigger than our corporate annual profitability targets.

We made significant progress on dealing with one of Uganda’s largest business predicaments – “Why 75% of Uganda’s SME’s do not survive past their third anniversary”. Being cognisant of the fact that SME’s are the lifeblood of every economy – we took this issue head-on through our Stanbic Business Incubator. We discovered through research that the underlying deficiency for most of these SME’s was a lack of skilling and consistent support to make these businesses more sustainable. We used our platform to establish great partnerships with organizations like German Development Agency (GIZ), Financial Sector Deepening Uganda – FSD Uganda (FSDU), and World Bank to broaden the impact of this initiative and have trained over 1,000 SME’s in a rigorous 4-month program that builds on the basic foundations of compliance, finance, bookkeeping, health & safety, legal requirements that were ultimately the cause of their high mortality rate.

We do this at zero cost to the SMEs. It’s completely free to all SME’s and you do not have to be a Stanbic customer. Early this year, the initiative was expanded to Hoima, Mbarara, Gulu and Mbale. I believe this is a great intervention to drive inclusive economic growth. We have real and proven data to support the returns on this.

Another key pillar for us and will always remain is Education – we invested UGX 2.4 billion in community initiatives on education programmes in several schools across the country. The Stanbic National Schools Championship has now consistently reached over 200 secondary schools and impacted over 100,000 Students.

Once again, it’s on the soft skills – how can we augment the national school curriculum to better equip students to not only survive but to thrive in the real world. We invest and train students and teachers in real-life business incubation ideas and invest in them. Education is a key pillar of our young nation and we need to support it.

How is the bank positioned for the future & any parting remarks?

The bank is and will always remain a key cog in the Uganda’s Economy. There is no doubt in my mind that we have all the basic foundations and remain committed to our purpose “Uganda is our Home and we drive her growth”. We will continue to support the growth of key growth sectors for the nation and support accordingly without question.

That said, in the wake of the global COVID-19 pandemic, we recognise the impact this will have on the lives of many Ugandans and the economy. We are looking to several interventions that can support our customers and work closely with the Government of Uganda to ensure a minimised impact on the economy.