Connect with us

Finance

Trillionaire’s Club: Inside 8 Uganda’s top banks running UGX22 trillion assets

Published

on

The 8 biggest banks, in order of size- Stanbic Bank, Centenary Bank, dfcu Bank, Standard Chartered Bank, Barclays Bank, Bank of Baroda, Equity Bank and DTB control UGX21.7 trillion (USD5.8 billion) in assets- or 77% of the industry's total assets, valued at (UGX28.2 trillion).

The Pareto principle (also known as the 80/20 rule, the law of the vital few), according to Wikipedia, states that, for many events, roughly 80% of the effects come from 20% of the causes.

It has since become an axiom of business management that “80% of sales come from 20% of clients”.

RELATED: https://www.ceo.co.ug/2018-ugandas-19-banks-rake-in-ugx790bn-profit-5-banks-still-loss-making/

Mathematically, it is generally believed that even many natural phenomena have been shown to empirically exhibit such a distribution- also known as the Pareto distribution!

Centenary Bank’s MD, Fabian Kasi (right) and Craft Silicon’s CEO Mr Kamal Budhabhatti (left) at the April 2018 launch of CenteMobile- a self service and instant loan product that lends instant loans via mobile for as low UGX. 5,000 up to a maximum of UGX. 2 million. The bank which has over 1.4 million customers is Uganda’s 2nd biggest lender with over UGX1.53 trillion lent out in 2018.

The Ugandan banking industry does not seem to be any different.

Meet Uganda’s 8 banks that control nearly 80% of the industry.

In order of size, they are Stanbic Bank, Centenary Bank, dfcu Bank, Standard Chartered Bank, Barclays Bank, Bank of Baroda, Equity Bank and DTB.

All of them, with the exception of Centenary Bank are wither foreign owned or have majority foreign shareholders- but at least three; the top three are run by Ugandan CEOs.

UGX 21.7 trillion assets  

They eight banks, together control UGX21.7 trillion (USD5.8 billion) in assets- or 77% of the industry’s total assets, valued at (UGX28.2 trillion). All the other 16 banks, control only UGX6.5 trillion in assets, or 23% of the industry.

USD5.8 billion is equivalent to 21% of Uganda’s GDP estimated at USD27 billion in 2018.

The big asset growth was driven by increased lending, buoyed by reduced interest rates. Uganda’s 8 largest banks together command 78% of industry lending, and in 2018, increased their loan portfolio by 12.8% (UGX1.1 trillion) from UGX8.8 trillion to UGX9.9 trillion. Stanbic Bank, topped the big lenders club, having lent out UGX2.5 trillion in 2018 (19.7% market share). At UGX2.5 trillion lent out in 2018, Stanbic bank nearly lent out more money than all the other 16 banks combined- that lent out UGX2.8 trillion altogether.

In 2018 alone, the 8 giants, added UGX1.13 billion to their assets, accounting for 74% of the industry’s new assets valued at UGX1.53 trillion.  

DO NOT MISS: https://www.ceo.co.ug/money-men-the-8-gentlemen-who-control-77-of-ugandas-banking-industry/

Stanbic, the largest of them all, although it registered a UGX11.1 billion decline in assets, remained the country’s largest bank with a humongous UGX5.4 trillion in assets or 19.1% of total industry share.

To demonstrate the top-heavy structure of the Ugandan banking industry, Stanbic, the No.1 bank in assets (UGX5.4 trillion), has 87 times more assets than ABC Capital Bank, the 24th bank, which in 2018 had UGX61.7 billion!

Follow tweet and link above for a related story about Uganda’s most powerful bank CEOS.

In the No.2 position is the church-owned Centenary bank that in 2018 saw its assets grow by 17.2%, from UGX2.7 trillion to UGX3.2 trillion. Centenary bank controls 11.3% of the market share.

Standard Chartered Bank, in the 3rd position, controls UGX2.92 trillion in assets (10.4% market share) closely followed by dfcu Bank in the 4th position, with UGX2.88 trillion (10.3% market share).

Barclays, in the 5th place, controls UGX2.8 trillion worth of assets and 9.9% industry share.

Bank of Baroda and DTB Uganda in the 6th and 7th position, control UGX1.7 trillion and UGX1.6 trillion respectively, representing 6.1% and 5.7% market share.

Equity Bank, which entered the trillionaires club in 2017, having notched UGX1 trillion in assets then, in 2018, saw their assets increase by a further 14.3% or UGX147.1 billion, closing 2018 with UGX1.2 trillion and a market share of 4.2%.

Big lenders club

Together 8 banks command 78% of industry lending, and in 2018, increased their loan portfolio by 12.8% (UGX1.1 trillion) from UGX8.8 trillion to UGX9.9 trillion.

Again Stanbic Bank, tops the big lenders club, having lent out UGX2.5 trillion in 2018 (19.7% market share). At UGX2.5 trillion lent out in 2018, Stanbic bank nearly lent out more money than all the other 16 banks combined.

Although there was a general fall in the cost of deposits from an average 3.48% in 2016 to 2.79% in 2017 and finally 2.26% in 2018, the industry continued to see a growth in deposits. Between 2017 and 2018, deposits grew by 8% from UGX18.2 trillion in 2017 to UGX19.6 trillion. The big 8 controlled 78% of the industry deposits.

The 16 banks lent out UGX2.8 trillion altogether.

In the 2nd position is Centenary bank with UGX1.5 trillion and dfcu Bank with UGX1.4 trillion in the 2nd and third positions. Standard Chartered bank, Barclays and Bank of Baroda come in the 4th, 5th and 6th positions respectively, with UGX1.3 trillion, UGX1.2 trillion and UGX757.2 billion lent out in 2018.

Equity Bank and DTB bank are in the 7th and 8th positions respectively, having lent out UGX699.8 billion and UGX534.2 billion respectively

Customer deposits

The 8 banks in 2018 also run 78% of industry deposits, having grown their deposits portfolio by 7.2% or UGX1 trillion from UGX14.2 trillion to UGX3.9 trillion.

Again Stanbic, Centenary Bank, dfcu Bank, Standard Chartered Bank, Barclays Bank, Bank of Baroda, DTB Uganda and Equity bank are the leaders in that order.

The Managing Director Barclays Bank, Mr. Rakesh Jha poses for a photo with fellow industry captains and diplomats at a Johnnie Walker whisky mentor-ship. The event, part of the Barclays Bank Consumer Rewards Program in partnership with Uganda Breweries’ Johnnie Walker Brand, attracted key stakeholders such as the US Ambassador to Uganda Deborah Ruth Malac, Indian High commissioner Shri Ravi Shankar, NSSF MD Richard Patrick Byaruhanga, South African High commissioner Prof.Maj. Gen Solly Mollo among others. The big 8, of which Barclays is among, picked up a fresh UGX1 trillion in 2018.

Stanbic, the biggest in deposits, took in a fresh UGX271.4 billion in customer deposits (a growth of 7.5%), reaching 3.9 trillion or 20% of industry deposits, closely followed by Centenary Bank with UGX2.3 trillion.

Although dfcu saw a reduction of UGX8.1 billion in deposits during 2018, it easily remained in the 3rd position with UGX1.97 trillion.

The industry is so top heavy that the top 5 banks in deposits, have more deposits (UGX11.9 trillion) than all the other 19 banks combined, who have UGX7.7 trillion.

Most profitable

Although the big 8 experienced a UGX9.7 billion decline in profits, they still controlled 90% of industry profits- taking in UGX676.5 billion in 2018, down from UGX686.2 billion in 2017.

The decline was largely caused by dfcu Bank which saw a 52% decline in profit, from UGX127.6 billion in 2017 to UGX61.7 billion in 2018.

Barclays also saw a 4.2% decline in profit, from UGX72bn to UGX69 billion in 2018

Stanbic bank, again led the pack with UGX 215.1 billion net profit or 28.7% of industry profit share.

With the industry nearly fully recovered from the 2016 crisis when Non-Performing Loans to total gross loans reached a record-breaking 10.47%- NPLS in 2018 were according to BoU at 3.41 %, the industry looks set to maintain this stability onwards throughout 2019.

Finance

Shilling gains strength, forms new support level

Published

on


The Uganda shilling strengthened, establishing a new support level of 3650, market activity was underpinned by low appetite for forex from commercial banks and importers.

The unit was also supported by inflows from offshore investor’s participation in the treasury bill auction.


Trading was in the range of 3657/3667. In the interbank money market, overnight funds quoted at 7% while one week averaged 10%.

In the fixed income segment, 220 billion was on offer for the Treasury bill auction. Yields remained relatively flat at 8.604%, 10.555% and 11.630% for 91, 182, 364 days respectively. All tenors were oversubscribed.

In the regional currency markets, the Kenya shilling gained ground, on account of tightening liquidity conditions in the local money market and reduced dollar demand. Trading was in the range of 103.55/75.

In the global markets, the dollar held firm against the major currencies as markets focused on the Federal Reserve likely action at its upcoming meeting where it is widely expected that it would cut rates.

Relatedly, President Trump took aim at the Fed, in a tweet stating that the ECB is succeeding in depreciating the Euro against the dollar hurting US exports while the Fed only sits.


Also in support of the greenback was the scaled back pessimism about the US- China talks, with growing chances of an interim trade pact coming soon than later.

In the UK, the pound gained 0.3% on the dollar after the British parliament moved to block a no deal exit from EU. However the sterling remained vulnerable over the uncertainty on the terms of exit.

In the Eurozone, the Euro dropped 0.75% after ECB cut its main deposit rate by 10 basis points to -0.5%, a record low, but in line with market expectations. The ECB also relaunched a quantitative easing program to boost the regional economy.

“In the coming week, the Uganda shilling seen trading in a stable range as mid-month corporate tax payments limit the demand for dollars,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.

Continue Reading

Finance

Uganda Hosts 55 African Customs Experts Conference at Munyonyo

Published

on

“It is a privilege for Uganda to be hosting such a high level annual continental meeting, and it speaks to the confidence the continent has in Uganda in terms of hospitality and diplomacy,” said Dicksons Kateshumbwa, who is Commissioner Customs, URA and  Chairman World Customs Union (WCO) Council.

Over 50 African customs bosses and technocrats from international bodies such as World Customs Organization, UNCTAD, IGAD and various diplomats are currently in Kampala at Speke Resort Hotel, Munyonyo for the continental customs conference.

Dicksons Kateshumbwa, Commissioner Customs, URA and  Chairman World Customs Union (WCO) Council. (FILE PICTURE)

The conference which kicked off today will end on 20th September. Uganda is hosting Directors General and Commissioners of Customs from 55 African Union (AU) member countries.

This conference will hold discussions on matters of customs and action points from last year’s 10th meeting held in Moroni Comoros that ended with a Moroni Declaration on Combating Corruption in Customs and the adoption of the AU Draft Trade Facilitation Strategy.

In Munyonyo, the main discussion will be on implementation of the AfCFTA and the theme of the conference is “The Entry into Force of the Agreement establishing the African Continental Free Trade Area (AfCFTA) – Implications to African Customs Administrations.”

“It is a privilege for Uganda to be hosting such a high level annual continental meeting, and it speaks to the confidence the continent has in Uganda in terms of hospitality and diplomacy,” said Dicksons Kateshumbwa, who is Commissioner Customs, URA and  Chairman World Customs Union (WCO) Council.

He added that, “This meeting also comes a time when Uganda is chairing the World Customs Organization Council, whose global conference was held in Africa for the first time in Kampala last year. It is also an opportunity for Uganda to show case its abilities to the rest of the continent such as the various trade facilitation initiatives by URA customs.”

The Constitutive Act of the African Union provides for Specialized Technical Committees. These Specialized Technical Committees report are responsible to the Executive Council. The African Union Sub Committee of Directors General of Customs is responsible to the Specialized Technical Committee on Trade, Customs and Immigration.

The Sub- Committee is responsible for Customs Cooperation one of the Thematic areas under the Department of Trade and Industry. The AU Subcommittee of Directors General of Customs (also referred to as Commissioners of Customs meet annually and the meeting Uganda is hosting is the 11th while the 10th Conference was held last year in Moroni, Commoros.

The new African Union Trade Observatory Dashboard is another step towards the African Continental Free Trade Area, which will help the continent harness its economic potential. It will provide the African Union, the African countries and the private sector with data and statistics that are essential for the sound monitoring of continental trade and evidence-based policy-making.

The Observatory will collect data and analyse trade across borders in Africa, addressing the current lack of up-to date-and reliable data and statistics. This information will be made available for policymakers and interested stakeholders, including economic operators. This will enable them to identify promising market opportunities and will facilitate the effective monitoring of the African Continental Free Trade Area implementation and impact once in place.

Continue Reading

Finance

Why Absa tapped Nazim Mahmood, to complete its separation with Barclays in Uganda

Published

on

Not only does Nazim possess two decades of banking experience from 3 global banking giants on two continents as well as prior Ugandan experience but more importantly, he has been closely involved in the delicate migration from Barclays to Absa of core banking platforms and digital channels of Absa’s Africa subsidiaries- making him the natural favourite to head Barclays in Uganda.

When it comes to migration, integration and rebranding, Barclays Bank has had a nasty experience in Uganda before. The 2009/10 integration of newly acquired Nile Bank into Barclays was such a pandemonium that at some point it sparked false fears that the bank was closing- but all that is in the past.

Barclays Bank has since stabilized today. It is the 5th largest bank by assets, lending, customer deposits and profitability, with approximately 10% market share on all those parameters. It, in 2018 registered UGX2.8 trillion in assets, UGX1.2 trillion in lending, UGX1.8 trillion in deposits and UGX69 billion in profits.

This time, with Barclays Bank metamorphosing into Absa, the powers that be know better than repeating the mistakes of the past and they couldn’t have tapped on a better person than Nazim Mahmood to head the Ugandan execution.   

Mr. Nazim Mahmood was in June 2019 appointed as Managing Director/Chief Executive Officer replacing Mr. Rakesh Jha who had served Barclays for four and half years, leaving the bank in a solid position.

During Jha’s time (2018 to mid-2019), Barclays, saw a Compound Annual Growth Rate (CAGR) of 13.3% in assets- on the back of a 63% growth in deposits and 98% growth in lending as at end of 2018.

Profitability grew by 67.4% as at end of 2018.

Not only does Nazim, come in with a wealth of retail, SME and corporate banking experience, spanning nearly two decades in between 3 global banking giants (Citibank, Standard Chartered and Barclays) in Asia and Africa, but he also possesses prior Ugandan experience, having worked as Director Retail & Business Banking (Commercial & SME) at Barclays Uganda, between August 2013 and August 2017. It is from here that he rose to Barclays Africa, Headquarters in Johannesburg as the Director Core Banking Transformation in charge of Greater Africa.

Barclays Bank Uganda Managing Director Nazim Mahmood (left) with Bank of Uganda Deputy Governor, Dr. Louis A. Kasekende at the July launch of the Absa SME Academy at Kampala Sheraton Hotel. Absa is counting on Nazim’s Uganda knowledge to achieve a seamless transition

It is perhaps his most immediate job as Director Core Banking Transformation, which made him more suitable for the Barclays Bank Uganda top job, whose key KPI is the delicate transition from Barclays Uganda to Absa Uganda, a process that the bank says will be completed by mid-2020.

Core banking is at the heart of modern banking especially in today’s world where banks are racing to provide seamless banking across multiple branches and branchless channels- both in-country and across the world and as such the migration from Barclays to Absa would first of all have to be seamless in-country but more importantly allow Barclays customers to continue transacting globally in the new Absa environment.  

As Director Core Banking Transformation he was closely involved in the successful migration of banking platform of six African Barclays/Absa subsidiaries- Botswana, Ghana, Mauritius, Tanzania, Seychelles and Zambia – from Barclays Plc’s data centre in the United Kingdom to Absa’s data centre in South Africa. This migration, which took place during 12th to 14th April, entailed moving customer transaction-processing capability and data from IT systems owned and housed by Barclays to systems owned by Absa in South Africa- a delicate process that Absa announced had been successful on 16th April 2019.

Between 18th – 19th May 2019 Nazim was also involved in the successful migration of digital channels and their respective account origination applications used by ten African subsidiaries — Tanzania, Ghana, Botswana, Zambia, Mauritius, Seychelles, Uganda, Kenya, Mozambique and National Bank of Commerce in Tanzania (NBC) (majority owned by Absa) — from the Barclays PLC data center in the United Kingdom to Absa’s data centre in South Africa.

Keeping the customer as the No.1 priority in the transition will ensure Barclays avoids a repeat of the 2009/10 Nile Bank-Barclays integration mess

With the heart and nerve centre of the transition done, Absa on 07th June 2019 announced that the programme to separate from Barclays PLC was 69% complete, with 184 of the 266 projects having been successfully delivered, two years into the three-year programme.

So the decision to bring Nazim to Uganda, to head Barclays’ full integration into Absa was just in time, as Absa now moves into the phase of actual name change and subsequently the blue to red transition.   

Part of the Absa Group’s separation agreement with Barclays PLC was to remove the Barclays brand from all assets by mid-2020 at the latest.  

Nigeria was on July 3, the first market out of South Africa to fully change over to Absa.   

About Nazim Mahmood

He started his banking career as the Credit Policy Head at Citibank, Karachi Pakistan (2002 – 2005) from where he became the Head of Risk Management, SME & Secured at Standard Chartered Bank in Dubai, UAE.

He then joined Barclays, as the Head of Branch Banking & Investments in Cairo, Egypt (August 2007 – September 2008) and went on to become the Head of Retail Business Development – Emerging Markets within the same bank. Between February 2009 and September 2011, he rose to become the Regional Head of Credit Operations at Barclays, Egypt.

From August 2010 to July 2013, he rejoined Standard Chartered Bank as the General Manager, Priority & International Banking in Karachi, Pakistan and in August 2013, he made a comeback to Barclays Africa, this time as the Director Retail & Business Banking (Commercial & SME) at Barclays Uganda.

In September 2017, he left for Barclays Africa, in Johannesburg to work as Director Core Banking Transformation, Greater Africa, his most immediate position before being appointed Managing Director / Chief Executive for Barclays Bank Uganda.   The seasoned banker holds an MBA (Finance) from the Bentley University’s Graduate School of Business as well as a bachelor’s degree in business administration from the University of Massachusetts, Amherst in the United States of America. 

Continue Reading

Ad3

Ad1

Ad2

Now Trending

error: Content is protected !!