Stanbic Bank Uganda has reported a 20.7% rise in pre-tax profit in the first six months of 2023, in figures reported on Friday.
The bank said it had earned UGX. 263.4 billion in profit before tax, a figure that was helped by higher interest income.
Stanbic’s net interest income was up 34.3% in the first half of the year.
Largely driven by the SUHL anchor subsidiary, Stanbic Bank, SUHL total revenues rose 24.2% from UGX475 billion to UGX590 billion. The other subsidiaries are SBG Securities, Stanbic Properties, Flyhub and Stanbic Business Incubator Limited.
Stanbic Bank net loans and advances to customers expanded by 4.2% to UGX 3.9 trillion, while customer deposits rose by 1.1% to UGX 6.2 trillion. The bank’s total assets also registered growth, surging from UGX 9.3 trillion in the previous year to UGX 9.4 trillion by the end of June 2023.
The bank remitted UGX 149 billion in taxes while also facilitating the collection of an additional UGX 4.1 trillion via Stanbic Bank Uganda channels.
Anne Juuko, the Stanbic Bank Chief Executive said, “Revenue experienced an impressive ascent during the initial half of the year, marking a 24.2% increment to UGX 590 billion, in contrast to UGX 475 billion during the analogous period in the preceding year. This growth encompassed a notable 34.3% surge in interest income, amounting to UGX 355 billion, as well as non-interest income, which generated UGX 235 billion, equivalent to an 11.6% expansion.”
She said, “Despite inflationary pressures and augmented technological investments, the bank adeptly outpaced cost increments, yielding a favourable positive Jaws ratio of 3.1%. Consequently, the bank’s Profit after Tax realized an impressive 23.5% growth, culminating in UGX 200 billion, juxtaposed with UGX 162 billion from the equivalent period in the previous year.”
The’ ‘jaws ratio’ is calculated by subtracting the expense growth rate from the income growth rate. According to Juuko, the challenging macroeconomic factors of the previous year crossed over into 2023 with a double inflation reading of 10.4% seen in the first month.
She said, “The Central Bank responded by maintaining the CBR at 10% to mitigate inflationary pressures. This strategy yielded positive outcomes in form of a steady reduction in inflation to 4.9% in June from 6.2% in May and 8% in April, per government statistics. Nonetheless, the high inflation raised the interest rates which, naturally, weakened the appetite for borrowing among our consumer and commercial clients market segments. While this was challenge it also presented an opportunity for us to be innovative in solutioning for our customers to drive new growth in assets and liabilities and other income streams.”
Stanbic Bank has maintained its position as the largest provider of household loans in Uganda reflected by a 13% rise of new customers. As part of its compassionate business approach the bank facilitated the extension of loan repayment periods to a maximum of 84 months or seven years for existing and new borrowing clients.
This not only eased monthly repayment obligations, but also provided substantial flexibility to apply for supplementary credit on existing loans, catering to emergent needs such as educational expenses and other needs. Furthermore, Stanbic afforded customers a grace period of up to 75 days prior to the first installment for those availing fresh facilities, along with repayment holidays for individuals seeking loan top-ups. This allowed customers to attend to competing priorities without the worry of going into default.
Also of significance is the increasing popularity of the FlexiPay app, a low cost channel that provides access to financial services for the non-Stanbic customers and the unbanked across Uganda. Use of FlexiPay was up 170% compared to the first half of 2022.
Juuko said, “The continued growth of FlexiPay remains a source of encouragement. As of June 2023, the user base of FlexiPay exceeded 700,000 individuals. Throughout the initial half of the year, the platform registered over 400% growth in transactional volumes processed, encompassing a substantial transaction value surpassing UGX 209.3 billion. The competitive edge of FlexiPay emanates from its affordability, security, and user-centric design, rendering it a prime driver of its sustained growth.”
During the first half of 2023, Stanbic maintained its support of businesses, disbursing UGX43 billion to local content clients in the nascent oil and gas sector and another UGX15.7 billion to 112 SACCOs.