Tropical Bank Limited has unveiled Abdulaziz M.A Mansur as its substantive Managing Director.
Dennis Mugagga Kakeeto, the bank’s Executive Director, has been doubling as Managing Director in acting capacity, since October 2018, following the summary sacking of Sameh M. Krekshi, the then Managing Director, who was fired by the board on orders of Bank of Uganda over apparently consistently overdrawing his salary account.
Abdulaziz M.A Mansur, who has more than 28 years’ experience in the financial services industry, holds a Master of Business Administration (MBA) in Accounting and Finance from the Yeditepe University in Turkey.
For five and a half years (2000-2005) he was seconded by the Libya Foreign Bank (LFB) to work as the head of audit at A&T Leasing Company, in Turkey, a subsidiary of A&T Bank, also in Turkey- itself majority owned by the Libyan Foreign Bank- an investment arm of the Libyan Central Bank.
LFB and the government of Uganda are joint shareholders in Tropical Bank, but LFB is the majority shareholder.
Between 2005 and November 2010, Abdulaziz, moved back to Tripoli, Libya and served as the Deputy Manager, Risk Management and Manager HR at Libya Foreign Bank. From December 2010 to September 2019 he served as the General Manager and one of the key people in starting up Nuran Bank- a joint venture between Libya Foreign Bank and Qatar Holding LLC- the investment arm of the Qatar Investment Authority.
Righting the wrongs of past management
Although Sameh M. Krekshi, who joined the bank in 2015, was sacked for seemingly overdrawing his salary account, a closer look at the bank’s performance between 2014 and 2018, reveals tells a story of gross performance failure, characterized by imprudent lending and subsequent debt write-offs and losses- perhaps the real reason why the former MD was summarily fired.
While deposits grew by 28.7% from UGX141.9 billion in 2014 to UGX182.6 billion in 2018, growth in lending was mixed. Between 2014 and 2016, the bank’s loan portfolio grew 22.6% from UGX115.8 billion to UGX142 billion, but during this time the bank got exposed to several defaults, causing Non Performing Loans (NPLs) to jump from UGX8.3 billion in 2014, to UGX14.9 billion in 2015; in 2016, NPLs more than doubled to UGX38.2 billion.
Although the bank slowed down lending, from UGX142 billion in 2016, to 139.1 billion in 2017 and then 128.7 billion in 2018, higher than normal NPLs refused to go away- UGX28.7 billion in 2017 and UGX21.9 billion in 2018. As a result, Tropical bank wrote down UGX11.8 billion in 2016, UGX12.06 billion in 2017 and UGX17 billion in 2018.
The NPLs drag effect combined with reduced lending severely impacted on the bank’s income and profit performance. Profitability has been mixed- while the bank posted a profit of UGX4.3 billion in 2014 and UGX1.9bn in 2015, in 2016, it was hit by a UGX13.4 billion loss, then another UGX5.5bn loss in 2017 and another UGX5.8bn loss in 2018.
Altogether, between 2016 and 2018, the bank has registered combined losses, amounting to UGX24.7 billion.
Total assets have also grown quite slowly- by 19.8% since 2014, from UGX241.7 billion to UGX289.5 billion in 2018- a compounded annual growth rate of 4%.
Abdul-Aziz’s job is clearly cut-out!
“I am here to help Ugandan businesses flourish,” Abdulaziz speaks out
Addressing the bank’s corporate customers at a dinner held at Hotel Africana on Thursday 26th September 2019, Mansur said that Tropical Bank’s objective is to support trade and development in Uganda.
“When the Bank was established in 1973 as a joint venture between the government of Uganda and Libyan Foreign Bank, its main objective was to support trade and development in Uganda and provide support in foreign trade with the outside world,” Mansur said.
“This is still our objective and I have come here as the new Managing Director of Tropical Bank to reinforce this vision. We strongly want our customers and their businesses to flourish and be successful. If our customers fail, so shall we as a Bank.”
He promised to offer customers unmatched financial services that are designed to meet their business requirements.
“Our doors are and will always be open to you. Just be transparent with us and allow us be the partners that will help you achieve your vision,” he added.
He said that the bank had committed resources to continuous innovation especially in the area of electronic and agent banking so as to make banking simple and easy for customers.
“Our Mobile Banking application and service is up and running. You can now have the bank in the palm of your hands, through your mobile phone. We have also introduced electronic fees payment through the use of School Pay system and in addition we are agents for Bancassurance services. We aspire to provide you with all banking services that you need, from high yield deposit products, to fairly priced lending products, insurance services, trade finance products and electronic banking channels,” he added.
Tropical bank has a network of 15 branches around the country, 8 of which are in Kampala. As at end of 2018, it was the 16th biggest bank (out of 24 banks) by assets (UGX289.5 billion), 17th biggest by lending (UGX128.7 billion) and customer deposits (UGX182.6 billion).
Ugandan travellers to China to enjoy better services with Orient Bank’s partnership with China’s UnionPay
Orient Bank Uganda Limited and UnionPay International have announced a partnership in which all UnionPay Cards are now accepted at all ATMs and POS terminals of Orient Bank, one of the leading and fastest growing banks in Uganda.
Annoucing the partnership in Kampala today, Darshana Bhatia, Orient Bank Excutive Director said, “This is yet another demonstration of our commitment to anticipate and meet our customer needs through technology, innovation and partnership. Uganda and China enjoy a robust trading relationship which relies greatly on each country’s intergration into the global financial system if ease of doing business is to be attained.”
UnionPay International is accelerating the promotion of digitized payments in East Africa. Today, UnionPay has over 80% acceptance on ATMs in Uganda and over 85% acceptance on POS terminals.
Mr. Luping Zhang, General Manager of UnionPay International Africa Branch said, “This partnership will offer holders of UnionPay cards a seamless payment experiece. Based on this collaboration, the two sides will explore future cooperation in rolling out UnionPay’s innovative products, including UnionPay QR Code payment and B2B online payment.”
Orient Bank has continued its quest to provide fast, convenient and safe payment systems to serve its niche customers in SME and High Networth Banking Segments.
This partnership will further boost trade between Uganda and China as visitors from China will be able to process payments at Orient bank ATMs and Point of Sale terminals across various merchants .
In partnership with more than 2,000 institutions worldwide, UnionPay has enabled card acceptance in 176 countries and regions, and realised card issuance in 58 countries and regions. UnionPay provides high quality, cost effective and secure cross-border payment services to the world’s largest cardholder base and ensures convenient local services to a growing number of global UnionPay cardholders and millions of merchants.
FINANCIAL DILEMMA: BoU needs fresh UGX 671bn in capital- Auditor General
Bank of Uganda (BoU) is undercapitalised to a tune of UGX671.712Billion According to the Auditor General, John Muwanga this poses a risk to the Central Bank’s operations.
The details of the Central Bank’s woes are contained in the 2018/2019 audit report of Bank of Uganda which carries queries that were raised by the Auditor General’s team.
The audit report highlighted that as per the Bank of Uganda Act, Section 14 (3), the issued and paid up capital of the Bank shall be a minimum of UGX 2 Trillion but as of June 30, 2019, the core capital of the Bank was below the minimum required capital by UGX671.712Billion while in the same period in 2018, the Central Bank was undercapitalized to a tune of UGX482.730Billion.
The audit report further explains that the operating losses of the Bank during the year ended June 30, 2019 were mainly attributable to interest expense paid to financial institutions on deposit auctions and vertical repos issued by the Bank in the management of monetary policy as per the Bank’s mandate and currency costs of UGX 198.274Bn which is equivalent to 89 % of the interest income) yet in 2018 the loss was recorded at UGX 155Bn representing 79% of the interest income.
The Central Bank management has explained that the costs of implementation of monetary policy that have caused erosion of the Bank’s core capital are currently fully borne by the Bank.
“I considered this to be a key audit matter because inadequate capital poses a business risk to the Bank and its operations. I performed the following audit procedures in this area, among others,”Muwanga cautioned.
The Central Bank also reported that during the period between July 2018 to June 2019, the Non-Executive Directors were each paid UGX.5Million net of tax per month as retainer fees and UGX2.5million net of tax per meeting as their sitting allowance.
The Central Bank’s board comprises of Prof. Emmanuel Tumusiime-Mutebile who doubles as Board Chairman and Governor, Dr. Louis Kasekende, James Kahoza, William Kalema, Judy Obitre Gama, Keith Muhakanizi and Josephine Okui Ossiya.
Stanbic September report bullish about economy; demand grows backed by credit growth
The Stanbic Purchase Manager’s Index (PMI) for September shows that the private sector activity remained in the growth territory at the end of the third quarter of 2019.
The survey, sponsored by Stanbic Bank and produced by IHS Markit, indicates that ability of firms to secure additional customers resulted in higher new orders and a subsequent expansion of business activity. Meanwhile, both input costs and output prices continued to increase.
The headline PMI was 55.7 in September, down from 57.5 in August, but still above the 50.0 no-change mark.
Stanbic Bank Fixed Income manager Benoni Okwenje, stated that the Private sector activity remained solid at the end of the third quarter of 2019. Despite the PMI declining to 55.7 in September from 57.5 in August, overall activity remains robust.
“Domestic demand continues to improve, partially driven by private sector credit growth over the last year. Despite higher input costs, the rise in new orders has supported overall output. It has now been 32 months in a row of improving business conditions and we suspect this trend will carry through for the rest of the year,” said Okwenje.
The report shows that new orders increased in September, with a number of panelists indicating that they had been able to secure new customers during the month.
The survey, which has been conducted since June 2016 and covers the agriculture, industry, construction, wholesale & retail and service sectors, contains the latest analysis of data collected from the monthly survey of business conditions in the Ugandan private sector.
According to the PMI report for September, the expansion in demand, alongside successful marketing, led to a thirty-second successive monthly rise in business activity. All five broad sectors saw growth of output.
“Purchasing activity continued to rise, extending the current sequence of expansion to 19 months. Faster suppliers’ delivery times meant that the increase in input buying fed through to an accumulation of inventories. Overall input prices increased, with panelists reporting higher costs for electricity and purchased items including cement, food products and stationery,” Okwenje added.
Companies responded to higher input costs by raising their output prices accordingly. Selling prices have increased throughout the 40-month survey so far.
The PMI report further states that the likelihood of continued new order growth and business expansion plans led to optimism among firms that output will rise over the coming year. “Over 74% of panelists were confident regarding the outlook,” the report showed in part.
The PMI is a composite index, calculated as a weighted average of five individual sub-components: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stocks of Purchases (10%). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI™) which provides an early indication of operating conditions in Uganda.
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