Bank of Baroda suffered a large decline in profitability in 2019, reflecting the impact of a rise in expenses and a slowdown in interest income.
Net profit after taxes of Shs45.3bn fell 38.3% year on year, equal to Shs20.2 per share, the bank said in a statement. In 2018, net income was Shs73.4bn after rising 48.7% from the previous year.
The bank’s total income rose by 2.2% year on year to Shs199.8bn, compared to an increase of 12.5% in 2018. Interest income was Shs162.6bn, up 2.4% while interest expenses rose 25.4% compared to a decline of 15.9% in 2018. Net interest income fell 7.9% to Shs109.4bn.
Non-interest income, on the other hand, increased to Shs37.2bn, 1% higher from the previous year.
Baroda’s income growth in 2019, particularly the lacklustre performance of interest income, is similar to that reported by Dfcu: its total income rose by just 1.7% year on year, with interest income falling 0.1% on a fall in interest on loans and advances.
The bank earned Shs165.8bn in interest from loans and advances in 2019, up 4.5% year on year but lower than the 17.1% growth recorded for 2018. Loans and advances to customers during the year came in at Shs48.3bn, down from Shs124.9bn the previous year, indicating that the bank lent far less in 2019 compared to the previous year.
Interest payments on customer deposits during the year amounted to Shs62.3bn, increasing 31% from 2018. Baroda said it received Shs135bn in deposits from customers in 2019, slightly lower than the Shs135.4 reported the previous year.
Total loans and advances grew 6.2% from the year before, to Shs804.2bn. Total customer deposits, on the other hand, rose 10.5% to Shs1.4 trillion.
Baroda’s total expenses increased by 25.9% year on year to Shs129.6bn, the results show. Operating expenses rose 18.4%, while its provision for loan losses was Shs3bn compared to a negative provision of Shs950m in 2018.
Net income before taxation was Shs70bn, falling 24.2% from the year before. The income tax expense rose to Shs24.8bn from Shs19bn in 2018.
The bank’s holding company, Bank of Uganda Limited, will pay a dividend of Shs10 per share, according to the results.