Absa profits rebound on lending income boost

Absa Bank Uganda Limited, formerly known as Barclays Bank of Uganda, returned to profit growth in 2019 on the back of stronger growth in lending income and a rebound in interest from trading securities.

Profits at the bank, which changed its name to Absa Bank Uganda Limited on 11 November 2019, fell 4.2% in 2018 to Shs68.9bn. Its financial statements for 2019, however, show that net profit rebounded during the year, increasing by 13.2% year on year to Shs78bn.

Profit growth was aided by stronger growth in interest from loans, which increased by 22.8% to Shs177.6bn compared to growth of 9.9% the previous year. Income from trading securities also rose by Shs5bn to Shs9.2bn, rebounding from a 52.7% decline in 2018.

The bank’s income rose 19.4% year on year to Shs404.9bn, up from growth of 11.4% in 2018. Interest earned from investment securities was Shs89.4bn, up 21.9%, while income from foreign exchange transactions rose 14.2% to Shs37.8bn. Income from fees and commissions came in at Shs69.8bn, increasing by 4.7% year on year.

Total loans grew 13.3% from the year before, to Shs1.3 trillion. Deposits from customers, on the other hand, rose 22% to Shs2.2 trillion.

Absa’s expenses were Shs307bn at the close of 2019, rising by 27.3% year on year. Operating expenses were reported at Shs165.2bn, rising 18.2% compared to an increase of 11% the previous year. Interest paid on customer deposits, on the other hand, increased to Shs52bn from Shs37.8bn, while management fees rose 34.7% to Shs40.9bn. Loan loss provisions were Shs12.2bn, up from Shs8.9bn in 2018.

Pre-tax income was flat at Shs97.8bn, while the bank’s income tax bill declined by 31.5% to Shs19.7bn.

Absa said it will pay Shs20bn in total dividends to shareholders, down from Shs30bn the previous year. The Johannesburg-listed Absa Group Limited owns a majority stake in the bank.