Centenary Bank loan growth pushes profits to Shs109.9bn in 2016

Centenary Bank profits rose 8.18% to Shs109.9bn in 2016, the bank announced on Monday, largely on the back of a rise in interest income on loans and advances.

Revenue increased to Shs463.85bn from Shs393.9bn in 2015, driven by a 20.33% rise in interest on loans and advances to 287.57bn. The bank saw its loan book growing 22.3%to Shs1,247.7bn from Shs1,020.22bn in 2015, the highest growth so far for banks that have announced their 2016 results.

Bank lending increased by 5% in 2016, according to data from Bank of Uganda, compared to a 19% rise in 2015 – meaning Centenary Bank’s loan growth was way above the average. The slowed growth of loans in the banking sector was due to a rise in nonperforming loans, which made banks more risk averse.

Although nonperforming loans rose by 29.82% to Shs35.64, their ratio to the total loans was just 2.8%, below the industry average of 10% in 2016, a fact the bank’s managing director, Fabian Kasi, pointed out in a statement.

Expenses rose 8.18% to Shs315.99bn, “mainly attributed to the bank’s expansion, improvements in staff welfare and increased investments in business technology,” Mr Kasi said. Employee benefits inched to Shs116bn from Shs105.18bn, and made up the largest share of expenses in 2016.

The bank saw its assets rise to Shs2,315.74bn from Shs1,974.4bn in 2015, driven by the growth in loans and a 77.54% growth in cash and balances with Bank of Uganda to Shs314bn.

On the other hand, customer deposits increased to Shs1,626.6bn from Shs1,380.19bn a year earlier, a growth of 17.85% which, according to Mr Kasi, was above the industry growth of 17.9%.

“The bank continued to attract new customers and closed the year with 1,482,617 deposit accounts compared to 1,473,958 the previous year, thereby maintaining the lead position in the industry,” Mr Kasi said.