Uganda’s largest bank reported a strong increase in first-half profits despite monetary tightening, as its traders delivered their best performance in three years and credit quality improved.
Stanbic Uganda Holdings Limited, the parent company of Stanbic Bank Uganda, said Friday that first-half profits rose 17.6 per cent from a year ago to Shs235.5bn, while income before loan loss provisions and operating expenses edged up 8.1 per cent.
However, profits slowed from last year’s robust gains, reflecting weaker growth in net interest income. SUHL’s first-half net profit rose 23.5 per cent year on year in 2023, while income before loan loss provisions and operating expenses jumped 24.2 per cent.
The Bank of Uganda raised its benchmark interest rate twice in the first half of the year to support the shilling, which had fallen to record lows against the US dollar, and to guard against inflationary pressures.
Stanbic said that the increase in the central bank rate led to a “slight upward trend in lending rates.” Net interest income grew by 2.1 per cent from a year ago to Shs362.2bn, the slowest growth in three years. This was the result of both slower growth in interest income and a sharp rise in interest expenses.
Despite the higher interest rates, net loans and advances to customers recorded the strongest growth in three years, rising 9.5 per cent to Shs4.4tn.
The company’s trading account was the standout performer. Net trading income climbed 26.5 per cent from the previous year to Shs168.7bn, its fastest growth since 2021, driving a 17.2 per cent increase in non-interest income to Shs275.2bn. Net fee and commission income grew by 5.7 per cent to Shs100.4bn.
Stanbic also benefited from an “improved asset book”, reducing loan loss provisions by 63.1 per cent to Sh14.4bn — a sharp turnaround from the first half of 2023 when they more than doubled year on year to Shs39bn. Income before operating expenses jumped 13.2 per cent to Shs622.9bn.
Pre-tax profit rose to Shs318.2bn, up 20.8 per cent on the previous year, stronger than in 2023. This followed slower growth in operating expenses, which increased by 6.2 per cent to Shs304.8bn.
Stanbic said it would pay out Shs140bn in dividends to investors for the period, equivalent to Shs2.73 per share, compared with Shs125bn last year.
