Standard Chartered Bank Uganda’s net revenue for 2019 grew at its fastest in three years as interest income rebounded, driven by interest from loans and advances, and from investment securities.
The bank reported an after-tax revenue of Shs124.6bn compared with Shs96bn in 2018, an increase of 29.8%. The rise in net profit represented the bank’s best annual performance since 2016 after a muted 3.1% growth in 2018 and a decline in 2017.
Income increased by 15% year on year, coming in at Shs461.2bn, compared to growth of 1.3% the previous year. Much of that growth was the result of an 18% jump in interest earned on loans and advances to Shs257.4bn, a big improvement from 2018’s rise of 2.1%. Interest income from investment securities rose 15.4% to Shs95bn after falling by 7.8% the previous year. Other income, a catch-all category, also increased by Shs10bn to Shs11.5bn.
Standard Chartered’s income growth from lending activities was achieved despite a 3.1% decline in net loans, from Shs1.3 trillion at the end of 2018 to Shs1.2 trillion at the end of last year. Instead, it reflects higher interest rates on loans in 2019: the central bank raised its benchmark lending rate by 1% to 10% in October 2018, only cutting it to 9% a year later.
Interest paid on customer deposits climbed to Shs44.7bn at the end of 2019, up 24.2% year on year and reversing a 36% fall the previous year. Customer deposits rose 11% versus 1% a year ago to Shs2 trillion. Other interest expenses were Shs4.2bn, up from Shs3.8bn a year ago.
Albert Saltson, StanChart’s managing director, said it took “significant steps” to reshape its business by implementing “refreshed strategic priorities.” These include digitisation, attracting a wealthier clientele, and offering more services and products that take advantage of its global network.
StanChart said it introduced a mobile app that offers access to more than 70 services in January 2019, and that more than 80% of its customers are now using the app. This helped increase client interactions outside physical branches to 86%. In addition, customer acquisition through digital platforms rose fivefold, the bank said in a statement.
New offerings targeting wealthier clients launched during the year include three bancassurance products — home, travel, and motor insurance — and partnerships with retail businesses to “provide value addition and discounted offers to our clients”.
The bank’s digitisation strategy seems to be paying dividends as it was able to keep its operating expenses in check; they rose 1.3% to Shs129.4bn, down slightly from 1.4% in 2018. Personnel expenses also declined by 0.1% to Shs66.7bn.
Total expenses were Shs308.5bn, up 8.9% year on year compared to a decline of 0.5% year on year. One of the biggest drivers of the increase were provisions for bad debts, rising 24.8% to Shs56.7bn. StanChart says its non-performing loans increased to Shs23.3bn at the end of 2019, up from Shs22.2bn a year ago.
Net income before income taxes were Shs152.6bn, increasing by 29.9% year on year. The bank’s income tax expense for the year increased to Shs28bn, up from Shs21.4bn in 2018.