Exim Bank falls to Shs4bn loss in 2016

In October 2015 the central Bank took over the management of Imperial Bank Uganda after its parent bank was closed in Kenya. Six months later, in March last year, it announced that Exim Bank Tanzania had bought more shares in the bank to become majority shareholder.

The bank changed its name and started operating as Exim Bank (Uganda) Ltd. However, as its results for 2016 published on Wednesday show, the uncertainty that followed Bank of Uganda’s takeover had a negative impact on its business.

Exim Bank became the first bank to report a loss for 2016, as a dip in activity dragged down its revenues. Profit after tax fell 275% compared to 2015, to a Shs4.1bn loss, because of a decline in revenue to Shs32.5bn from Shs36.3bn in 2015.

Revenue fell because the bank collected lower interest on loans and advances compared to 2015. Interest on loans declined by 9% to Shs19.7bn, pulling down interest income to Shs27.8bn compared to Shs28.4bn in 2015.

Income from fees and commissions also declined by 33.1% to Shs2.5bn, as well as income from foreign exchange transactions which fell to Shs1.1bn from Shs2.5bn in 2015.

The bank’s expenses also fell 3.4% to Shs32.8bn, largely because of a 43% decline in interest paid on borrowed funds and a 4.4% fall in interest paid on customer deposits. It reported a pre-tax loss of Shs287bn.

Loans and advances to customers declined by 9.6% to Shs153.bn from Shs170bn. Nonperforming loans, however, increased to Shs22.2bn, up from Shs5.3bn in 2015.

The bank’s assets reduced by 2.6% to Shs312bn versus Shs320.8bn in 2015.

Customer deposits increased by 7.4% to Shs242.6bn compared to Shs225.8bn in 2015. Liabilities declined by 7.5% as the bank reduced balances owed to other banks to Shs7.5bn from Shs37.7bn.