Housing Finance Bank reported a 22.9% jump in net profits for 2016, helped by a decline in its income tax expense, and a rise in interest income driven by higher returns on investment securities.
The specialist mortgage lender said that net profit in 2016 rose to Shs18bn from Shs14.6bn in 2015, on the back of a 21% decline in income tax to Shs4.1bn versus Shs5.2bn in 2015.
Revenues rose 19.7% to Shs113.2bn, helped by stronger results in its treasury department and a growth in fees and commissions. Interest on investment securities increased by 79.3% to Shs21bn, while fee and commissions income grew 20.2% to Shs11.5bn.
A rise in provisions for bad and doubtful loans, by 138.9% to Shs9.6bn, pushed up total expenses to Shs91.1bn, a 21.9% increase versus last year. The interest paid on deposits grew 45.2% to Shs13.6bn, while employee benefits and costs rose to Shs29bn from Shs24.1bn in 2015.
Profit before income tax was up by 11.4% to Shs22.1bn.
The bank’s managing director, Mathias Katamba, credited the bank’s performance in a “uniquely challenging year particularly for the real estate sector ” on improved efficiency and service delivery.
Housing Finance had a 9% growth in loans and advances to customers (which increased to Shs401.4bn), a larger growth than competitors who have reported results. Loans and advances rose 4.5% at Dfcu and 3% at Stanbic, while at Standard Chartered they declined by 6.5%.
The sector average for growth in lending was just 5% in 2016 compared to 19% in 2015, according to Bank of Uganda data. This was blamed on a rise in nonperforming loans which increased risk aversion among lenders.
Assets increased by 9.9% to Shs680.2bn, driven by the growth in loans and a 15.8% rise in government securities held to maturity, which came in at Shs131.8bn.
Customer deposits grew to Shs353bn, increasing by 15.3% and pushing total liabilities to Shs550.5bn from Shs498bn in 2015.
The bank’s stocks of bad loans however rose by 84.3% to Shs30.5bn, even as it recorded a decline of 31% in bad debts written off.
Shareholders equity increased to Shs129.6bn from Shs120.4bn. The major shareholder in the bank is the National Social Security Fund with a 50% stake while the government, represented by the Minister of Finance, Planning and Economic Development has a 49.18% stake. National Housing and Construction Company is the other shareholder with 0.82%.
The bank’s directors authorised a dividend payout of Shs15.2bn from Shs11.3bn in 2015.