Stanbic Uganda Holdings Limited (SUHL) has announced it grew its net profits by 11% in 2021 to earn UGX269billion from Ush.242billion in 2020, driven by robust growth in non-interest income earned by mostly Stanbic Bank Uganda Limited, its anchor subsidiary.
Other subsidiaries of SUHL include SBG Securities Uganda Limited, Stanbic Business Incubator, Stanbic Properties Limited, and FlyHub Uganda; however, these are new companies still in their formative stages to support the bank serve its customers beyond offering traditional financial services.
Stanbic Bank is Uganda’s largest bank by assets, deposits, income, lending and the most profitable of the 25 active banks. SBG Securities is a licensed investment firm; FlyHub is fintech firm providing financial, technology and innovation services, while Stanbic Properties is the property management arm of SUHL that carries out valuation, facilities management, maintenance, project management, advisory services, market research and real estate digital platform.
Stanbic Business Incubator is the non-profit arm of the Group that supports and nurtures SMEs to prepare for business growth opportunities.
Growth in key fundamentals
According to the financial results released by SUHL, Stanbic Bank Uganda net profits in 2021 increased to UGX275billion from the UGX243billion registered the previous year, largely driven by growth in trading income.
Non-interest revenue grew significantly, by 19.0% to UGX401 billion from UGX 341 billion the previous year. Much of the growth according to the statement came from non-interest revenue which was attributed to trading income which increased to UGX233.7 billion from UGX177.3 billion the previous year.
Net interest income for the year grew marginally by 1.5% to UGX498billion from UGX490billion the previous year attributed to slow growth in customer loans and lower margins as the country underwent a second lockdown in the middle of 2021.
The low economic activity in the year under review also informed low appetite in credit which saw marginal growth in the loan book to UGX3.7trillion from UGX3.6trillion the previous year but maintained a 23.3% market share.
The bank said lending was guided by the need to avail credit to sectors that are critical to driving growth such as trading and manufacturing.
According to statistics released today, the bank lent UGX290 billion to the trade sector, which is the second highest employer in Uganda, UGX225 billion to household lending, UGX223 billion to building and construction, UGX218 billion to manufacturing and UGX150billion to agriculture–the highest employer in Uganda.
dfcu Bank Partners with Jubilee Health to Launch BlueCare Health Insurance SolutionCustomer deposits for the bank grew by 5% from UGX 5.4 trillion to UGX 5.7 trillion in 2021, something the bank, attributed to “sustained customer brand loyalty and service experience through offering financial solutions that are appropriate for their needs.”
“Stanbic’s financial positioned remained strong in 2021 with the capital adequacy ratio, which measures the ability of a bank to meet its obligations by comparing its capital to its assets, improving from 18% to 21.9%, a rise of 3.9 percent compared to 2020,” the bank added in a statement.
Resilience through the pandemic and optimism ahead
Commenting about the results, Andrew Mashanda, the SUHL Chief Executive said that as was the case in the previous year, 2021 was equally challenging especially during the first three quarters when the Covid19 pandemic worsened, forcing the economy into another lengthy lockdown that affected several business activities across the country.
“Notwithstanding these headwinds, Stanbic managed to post resilient results albeit slower growth in some areas. Our performance remains largely driven by the Bank, but we are confident in the other subsidiaries to registering good return on investment,” he said.
Anne Juuko, the Stanbic Bank Uganda Chief Executive said “the business focused on sustained management of asset quality through proactive engagement of customers, restructuring loan repayments, and waiving or suspending interest repayment on loans by client businesses in sectors such as education that were most hit by the impact of covid-19 pandemic.”
As a result of this, the bank reported that non-performing loans dropped to 4.6% from 4.7% the previous year. Provisioning for the bad loans, thus reduced to UGX70 billion from UGX92 billion in 2020.
“The economy is now fully open after two years of slow activity due to the pandemic—we are upbeat and ready to support full economic recovery. We shall continue to innovate for the customer and avail digitally disbursed affordable credit through bespoke products for women, youth, farmers and our corporate customers,” said Juuko.
On dividends, SUHL said that shareholders will have to wait until “a change in stance by Bank of Uganda which in April 2020, put in place enhanced guidelines for all Supervised Financial Institutions, in relation to discretionary payments, including dividends, for purposes of capital preservation.”
“The proposed dividends for 2020 remain under review by Bank of Uganda, the results of which will inform the 2021 dividend recommendation of the Directors,” Juuko emphasised.
