Finance Trust Bank, has today released its 2021 financial performance results, reporting yet another year of strong growth. According to the results, the bank, despite a challenging 2021, registered double-digit growth in most of its business fundamentals.
As a result, the bank set new record highs in its 9-year history since it was granted a commercial banking license in 2013.
Net profit after tax grew by 57% from UGX5.8 billion in 2020 to UGX 9.16 billion in 2021— the highest ever.
This was on the back of equally strong growth in total income— by 23%, from UGX75.2 billion to UGX92.6 billion. Income growth was largely boosted by a 19% growth in lending— from UGX203.2 billion to UGX242.5 billion. A solid increase in lending supported a 17% rise in interest earnings on loans and advances from UGX48.2 billion to UGX56.6 billion.
Interest earnings on loans and advances earnings constituted 61% of the bank’s total income in 2021.
Other major income lines, notably, fees and commissions income also grew by 30%, from UGX19.9 billion to UGX25.9 billion.
As a result of strong performance in lending, which forms a significant portion of the assets base (62% in 2021), saw the bank’s asset base grow by 21%, from UGX325 billion to UGX393.9 billion.
However, a dampened economic environment got in the way of the bank’s deposit raising initiatives, causing customer deposits to decrease by 10% from UGX203.4 billion in 2020 to UGX183.4 billion in 2021.
Overall, this sturdy performance led to further growth in shareholder value, with shareholder funds (equity), increasing by 18%, from UGX52.1 billion to UGX61.2 billion.
Commenting on the results, Annet Nakawunde Mulindwa, the Finance Trust Bank Managing Director, said that the 2021 results are reflective of the bank’s proactive initiatives to support its customers during what has been a challenging two years- 2020 and 2021.
“Amidst the challenges of the day, the bank devised deliberate steps to handhold the struggling businesses such as schools, entities in the entertainment and transport industry and corresponding value chains by adopting further measures in addition to the government credit relief measures that had been instituted. Such measures included interest and penalty waivers for loans, restructuring of facilities, deferring of payments for both interest and principal in anticipation of a full reopening and writing off facilities for businesses that had been closed due to the pandemic,” she said in a media statement accompanying the results published today.
“The bank further continued its online engagement with its customers for reassurance and devise means how to get through the tough times with hope and optimism,” she stressed, adding: “Internally, the bank’s focus was to retain its entire staff complement and use this slow business environment to enrich the skills set through training and capacity building. The bank did not find it necessary to reduce its workforce or reduce the pay but amidst the pandemic managed to improve remuneration for all employees to cater for the inflationary tendencies.”
“The key driving factors for our measures of resilience were rooted in optimism for a brighter future and management used this period to build a foundation that will see an even better shift in the performance of the bank post covid 19,” she reiterated.
Analysis: Steady growth trajectory
Headquartered in the Katwe, Kampala, Finance Trust bank operates a network of 34 Branches, including one in the hard-to-reach Kalangala Islands. In fact, 70% of the bank’s branches are in rural areas. The bank currently serves over 500,000 savers and over 29,000 borrowers.
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Finance Trust, offers a broad range of financial solutions, including loans, deposit accounts, money transfer services, utility bills collection, and insurance services to small and medium-income people companies, SMEs, institutions, and high net-worth individuals. The bank is also active in trade finance and treasury services.
Finance Trust Bank’s 2021 results are consistent with the double-digit growth rates exhibited by the bank since it was granted a commercial banking license 9 years ago. During these nine years, the bank has remained true to its roots and purpose— being the bank of choice, that efficiently delivers innovative financial solutions to, especially women and in return, has earned growing trust and loyalty across the country.
Under the leadership of Annet Nakawunde Mulindwa, the bank’s assets have grown by more than 4 times, by 326.8% from UGX92.3 billion in 2013 to UGX393.9 billion in 2021 a compounded annual growth rate (CAGR) of 17.5%.
Lending too has quadrupled, growing from UGX59 billion in 2013 to UGX242.5 billion in 2021- a CAGR of 17%.
Customer deposits in this period have also grown from UGX46.1 billion in 2013, reaching an all-time high of UGX203.4 billion in 2020, before taking a 10% decline to UGX183.4 billion in 2021. Overall, deposits have grown by a compounded annual growth rate of 16.6% in the 9 years.
Net profit too has consistently grown, by 384.2%— from UGX1.9 billion to UGX9.2 billion, a CAGR of 19.2%, thanks to steady growth in total income. In the 9 years, the bank’s total income has grown by 210.7%, from UGX29.8 billion to UGX92.6 billion—a compounded annual average growth rate of 13.4%.
Shareholder funds have more than doubled— from UGX29.1 billion to UGX61.2 billion in 2021- a CAGR of 7.7%.
As the bank gets more efficient, the cost to income ratio has improved from a high of 98.6% to 85% while the Return on assets has improved from 1.75% in 2013 to 2.7%. Return on Equity too has greatly improved from 5.56% to 16.9%.
Looking ahead with optimism
According to Nakawunde, with the full opening of the economy, the bank looks forward to even healthier growth in the future.
“The bank is poised with optimism and an excellent growth perspective on all its business lines as seen by the performance of the last quarter of the year 2021 which saw a huge growth in the loan book as compared to the previous quarters. Through more partnerships, the bank will see the introduction of several products on both assets, liabilities and the distribution channels,” she said.
She added the bank looks to continue creating more strategic business alliances within the industry and non-industry ecosystem to create more efficiency as well as extend financial services to the under-banked and unbanked populations. “The bank will further strategic alliances towards underscoring the objective of financial inclusion through increased sensitization of customers, creation of more partnerships, improvement of channel effectiveness, service uptime, product development, especially in credit assessment and origination and finally opening up of more branches in areas currently not covered but also continue the journey of creating a better ambience for our customers and staff,” she said.
