UGX 906 bn in profits; 2019 was a good year for Ugandan banks The Ugandan banking industry in 2019 was UGX80 billion short of hitting a historic UGX1 trillion in net profit- thanks to a healthy growth in the balance sheet- UGX32.9 trillion; itself powered by a record UGX 23.3 trillion in deposits and a UGX14.3 trillion loans portfolio.

Eighteen (18) profit-making commercial banks in Uganda, made a UGX906 billion (USD238.5 million) in profits in 2019. This was a 14% increase from UGX794.7 billion in 2018 profits. This was on account of healthy double-digit growth in both deposits and lending.

An analysis of 25 of Uganda’s 26 licensed banks (Cameroon’s Afriland First Bank is yet to formally open shop), shows that the banking industry in 2019 picked up  UGX3.6 trillion in fresh deposits- a growth of 18.4percent from UGX19.7 trillion in 2018 to UGX23.3 trillion. Deposits in 2019 grew 7 percentage points above the 5-year- compounded industry average of 11.5 percent.

Burgeoning deposits, also saw to double-digit growth in industry lending. Banks in 2019, lent out UGX1.5 trillion more than they did in 2018- from UGX12.8 trillion in 2018 to UGX14.3 trillion, a growth of 11.4 percent. Industry lending was also above the 8.3 percent 5-year compounded annual growth rate (CAGR). Notably, lending grew slower than deposits as banks balanced their lending risk with an appetite for the less risky government paper- as reflected by the industry deposits-to-loans ratio of 61 percent.

Healthy deposits and lending growth led to 16 percent growth in the balance sheet. Assets grew by UGX4.6 trillion, from UGX28.3 trillion to UGX32.9 trillion.

However, industry losses also increased from UGX39.4 billion to UGX57.5 billion as the number of loss-making banks increased from five to seven. Two banks- Commercial Bank of Africa (CBA) and Tropical Bank registered particularly big losses- UGX10.5 billion and UGX24 billion respectively.

KCB Bank, Orient Bank, and ABC Capital slid from profit to losses.

However, on a positive note, two banks- NC Bank and GT Bank outgrew their losses and became profitable. NC Bank turned around their UGX 4 billion loss in 2018 to UGX3 billion in profits, while GT Bank moved from UGX10.1 billion in losses in 2018 to a UGX1.1 billion profit.

Top-heavy industry; the richer get richer

The banking industry in 2019, remained a top-heavy affair with the 5 largest banks- Stanbic Bank, Centenary Bank, Absa Bank Uganda, Standard Chartered Bank and dfcu Bank controlling 61.1 percent of deposits (UGX13.6 trillion), 58.5 percent of lending (UGX8.7 trillion) and 76 percent of the industry profits (UGX690.9 billion).

The top 5 banks in 2019 combined, picked up UGX1.7 trillion more in deposits and were thus able to grow their lending by UGX808 billion- from a combined UGX from UGX 7.9 trillion to UGX8.73 trillion.

They also grew their asset base by UGX2.6 trillion- from UGX17.2 trillion to UGX19.8 trillion and as a result, grew their combined profits by UGX141.4 billion- from UGX549.5 billion to  UGX690.9 billion.

Stanbic Bank, remained the country’s largest bank by assets (UGX6.7 trillion), lending (UGX2.9 trillion), deposits (UGX4.7 trillion) and profits (UGX258.7 billion). Accordingly, Stanbic controls 20.2 percent market share of assets (19.1 percent:2018), 20 percent of lending (19.7 percent; 2018) 20.3 percent of deposits (19.8 percent in 2018) and 28.6 percent of profits (28.7 percent in 2018).

So big is Stanbic that its assets in 2019 (UGX6.7 trillion), are bigger than the assets of 16 banks from the bottom, who altogether in 2019 had UGX5.97 trillion in assets.

Centenary Bank, the second-largest bank for two years in a row, consolidated its position, growing deposits by 11 percent from UGX2.8 trillion to UGX2.5 trillion and lending by 14 percent from UGX1.5 trillion to UGX1.74 trillion. Profits grew 45 percent from UGX107.6 billion to UGX156 billion- the highest ever for the Catholic Church majority-owned bank that started in 1983 as a credit trust.

The bank’s assets grew 12 percent from UGX3.17 trillion to UGX3.6 trillion. The bank has over the last 10 years, moved steadily from the 4th largest bank, overtaking Standard Chartered Bank and dfcu Bank to the second-largest bank. 

Centenary Bank now controls 11 percent market share of assets, 12.2 percent of loans, 10.9 percent of deposits, and 17.2 percent of industry profitability.

Absa Bank Uganda was the other biggest gainer in 2019. Absa’s assets grew 22.5 percent or UGX628.6 billion; from UGX2.8 trillion to UGX3.4 trillion making Absa, the 3rd largest bank in Uganda- jumping two places and overtaking Standard Chartered Bank and Dfcu Bank. Absa also controls 9.4 percent of industry deposits (UGX2.2 trillion) and 9.3 percent of industry lending (UGX1.3 trillion). It is also the 4th most profitable bank- UGX78.1 billion (8.6 percent of industry profits).

Standard Chartered Bank, which five years ago was Uganda’s second-largest bank, has been pushed to the fourth position, holding UGX2.1 trillion in deposits and UGX1.3 trillion in lending. Its assets in 2019, rose 7.9 percent to reach UGX3.1 trillion. Profits also rose to UGX124.7 billion putting an end to a sad 2015 chapter that saw bank profits sink from UGX114.5 billion in 2014 to UGX28.3 billion.

dfcu Bank, the 5^th largest bank, in 2019 grew its deposits by UGX60 billion from UGX1.98 trillion to UGX2.01 trillion. This was powered a UGX141.1 billion growth in lending from UGX1.4 trillion to UGX1.53 trillion and as a result- saw its assets grow by UGX70 billion- from UGX2.9 trillion to UGX2.98 trillion. Net profit grew from UGX69 billion to UGX73.4 billion.

Bank of Baroda (UGX1.9 trillion) and DTB Uganda (UGX1.7 trillion, kept their 6th and 7th largest banks position. Equity Bank (UGX1.6 trillion) and Citibank (UGX990.7 billion) remained in the 8th and 9th place.

Housing Finance Bank (UGX.912.5 billion) displaced Bank of Africa out of the  10th largest bank position.

The trillionaire club – CEO East Africa’s informal club of banks with over UGX1 trillion in assets remained unchanged with only 8 banks in there- i.e. Stanbic, Centenary Bank, Absa, Standard Chartered Bank, dfcu Bank, Bank of Baroda, DTB Uganda and Equity Bank.

Citibank, which in 2019 grew its assets from UGX913.1 billion to UGX990.7 billion in 2019, was only UGX9 billion short of crossing into the UGX1 trillion club.

Opportunity Bank, which on September 13^th, 2019 got licensed as the 26^th commercial bank had its deposits growing from UGX65.5 billion to UGX86.5 billion. The bank debuted as the 21st largest lender- its loan portfolio grew from UGX90.5 billion to UGX109.3 billion. As a result, assets grew by 27 percent from UGX132.3 billion in 2018 to UGX168.  Income also grew by 18 percent from UGX36 billion to UGX42.5 billion. However operating expenses rose by 29 percent from UGX30.3 billion to UGX39.1 billion as a result of costs related to crossing over from a tier 2 institution to a commercial bank.

During the year, the bank completed upgrading its core banking system and opened a new branch in Abayita Ababiri, Entebbe

Profits went down from UGX4.4 billion to UGX2.5 billion as a result of the increased costs.