Stanbic Bank Uganda touted the success of its digitisation strategy on Wednesday as operating costs fell 3.2% in 2017 compared to a 17.4% rise in the previous year.
According to the bank’s audited financials, pre-tax profit increased by Shs11.7bn to Shs265.6bn even though it posted less total income.
Total income fell by Shs7.4bn in 2017 to Shs636bn due to a 6.2% decline in net interest income. Stanbic Bank dropped its prime lending rate four times in 2017 – from 21% in January to 18% at the end of the year – which it said was responsible for the drop in net interest income. But noninterest revenue was boosted by Shs16bn following the introduction of charges on some digital transactions and the creation of new business such as bancassurance.
Stanbic, Uganda’s biggest bank by assets, revealed that 78% of all transactions in 2017 were carried out on digital platforms, compared to 76% in 2016. It hopes that 90% of routine transactions are done on digital platforms by the end of 2020.
Stanbic managed to contain costs, which it attributed to operational efficiencies resulting from big investments in information technology and its digital growth strategy. Total operating costs fell 3.2% to Shs341.4bn versus a 17.4% increase in 2016.
Staff costs rose by just 3.5% to Shs141.4bn, a tame rate compared to the 13.9% increase recorded in 2016. The number of employees dropped to 1,740 at the end of 2017 compared to 1,802 the previous year, a decline Stanbic said was “informed by our digital agenda”.
Other operating expenses – which exclude staff costs and asset write-offs – fell by Shs19.7bn to Shs173.6bn. Stanbic reduced the number of its active branches and service points from 82 to 79, eliminating the expenses used to maintain those properties, and recovered Shs3.8bn in operational losses.
Net profit for the year grew by 4.9% in 2017 to Shs200.4bn. Profit for 2016 was Shs191.1bn and increased by 26.8% from the previous year. Last year’s rise in profit, therefore, points to a slowdown compared to 2016. It was a result of lower income, particularly net interest income. Stanbic warned of this, though, in it’s results presentation for the six months ended June 2017: “We expected a slowdown in 2017 as rates drop and bottom out which should provide a strong base for 2018 growth,” it said. Still, it’s the bank’s highest after-tax profit ever.
Stanbic, which is listed on the Uganda Securities Exchange, will pay a dividend of Shs1.76 per share to its shareholders for 2017; the dividend in 2016 was Shs1.17 per share. It will hold its annual general meeting on 31 May 2018 and the dividend will be paid by 01 July 2018.