Finance Trust Bank has reported a 131% increase in after-tax profit after a difficult 2016.
Net after-tax profit more than doubled to Shs2.37bn in 2017 from Shs1.03bn reported in 2016. Profit had been consistently growing until 2016 when it reduced by 49% from Shs2.01bn to Shs1.03bn.
The bank then attributed their dip to a difficult global environment and decreased economic activity in the country. “Under the circumstances, our performance in 2016 is commendable,” Irene Muloni, then-chairperson of the Board said.
Finance Trust Bank reported an increase in income this year from Shs51.5bn in 2016 to Shs55.3bn in 2017 with more money realised in interest on loans and advances (7%) and 112% more from interest on marketable/trading securities. The bank’s interest received from trading securities increased from Shs609.4million in 2016 to Shs1.3bn in 2017.
Total expenditure increased by 2.9% from Shs50.2bn in 2016 to Shs51.6bn in 2017, much lower than the 17.6% increase in 2016. In 2017, the bank spent less on interest on deposits and borrowings but provisions for bad and doubtful debts increased from Shs2.77bn in 2016 to Shs3.91bn in 2017.
Operating expenses increased by 2.2% from Shs38.2bn in 2016 to Shs39.1bn in 2017, compared to a 12.4% increase in 2016 from the Shs34.03bn recorded in 2015.
According to the 2016 Annual Report, the increases in operating expenses that year came from more money spent in advertising and promotion (38%), communication and technology (14.7%) and money spent in repair and maintenance of depreciated property and equipment (34.9%).
There was a slight decrease in non-performing loans which went down by 6.5% from Shs5.08bn in 2016 to Shs4.75bn in 2017. However, the bank had a 70% increase in the bad debts written off from Shs2.21bn in 2016 to Shs3.77bn in 2017.
Customer deposits continued to grow in 2017, increasing by Shs7.95bn to Shs102.96bn in 2017.
Borrowed funds increased from Shs19.85bn to Shs23.32bn while loans and advances increased from Shs106.19bn to 110.42bn in 2017. The bank – whose majority shareholder is Uganda Women’s Trust – offers several products specifically for women. In 2016, women constituted 35% of the bank’s credit portfolio.
The Bank was first registered as a non-government organisation in 1984 as “Uganda Women’s Finance and Credit Trust Limited” and later changed its name to “Uganda Women’s Finance Trust Limited” in 1997. It became a microfinance in 2005, offering money to its customer base, who are mainly women. Over the years, since they became a commercial bank, they have increased their product offers to women and people in rural areas. 70% of their branches are located in rural areas.
2016 saw them increase the number of products they offered to women, and this contributed to their operating expenses especially in communication and advertising. While the bank made more money, its increase in expenditure was very high and this contributed to the 49% decrease in after-tax profit. With all the products in the market already, the increase in expenditure in 2017 was not too big to offset the increase realised in income.
However, it appears the bank is also cautiously lending – hence the 6.5% drop in non-performing loans and assets as well as a 12.6% decrease in their insider loan exposure. Insider loan exposure went down by only 1.42% in 2016.