Stanbic Bank said trading gains from debt securities holdings fuelled its profits rebound last year, but a slowdown in economic activity weighed on other revenue streams.
Uganda’s largest bank by assets reported net earnings of Shs275.4bn (Shs76.9m) in 2021, up 13.3 per cent from the previous year and reversing the 6 per cent drop posted in 2020.
The results also show that the bank cut down on lending to businesses and relaxed its loan-loss provisions, a move intended to decrease its exposure to problem loans. Andrew Mashanda, chief executive of the bank’s holding company, said effects of the Covid-19 pandemic were most prominent in the first three quarters as lockdown measures subdued business activity.
Total income after provisions rose 12.3 per cent to Shs900.6bn, up from the decline of 3.2 per cent reported in 2020. This resulted from a relaxation in loan-loss provisions, down 23.2 per cent after increasing by 110.8 per cent the previous year.
Stanbic’s outstanding loans to customers at the end of the year came in at Shs3.7tn, growing by 2.9 per cent on-year, down from 26.8 per cent a year earlier.
“The bank sustained efforts to manage 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,” CEO Anne Juuko said.
Net interest income growth was muted, up 1.5 per cent to Shs497.9bn versus 2020’s increase of 9.3 per cent. This was largely due to a decline of 13.3 per cent in interest on investment securities. On the other hand, interest income from loans and advances increased to Shs443bn, 5.1 per cent higher than in 2020 and less than the previous year’s growth of 5.7 per cent.
Overall, interest income grew 1.4 per cent down from 10.7 per cent, and interest expenses rose 0.6 per cent compared to 2020’s 27.8 per cent jump.
Noninterest revenue increased to Shs402.6bn, 18.3 per cent higher than in 2020 and rebounding from a fall of 5 per cent the previous year. Growth was driven by interest revenue from trading securities which rose to Shs233.3bn from Shs153.9bn a year ago. Net fee and commission income increased 4.5 per cent to Shs164.4bn.
