Stanbic posts 7.4% profit as its loan book contracts
Posted Wednesday, March 20 2013 at 02:00
A slowdown in economic activity made it difficult for customers to borrow.
Stanbic Bank recorded a 4.67 per cent drop in the total loans and advances it offered its customers, the bank’s financial statement for the year ending December 31st 2012, shows.
The statement indicated that loans and advances to customers reduced from Shs 1.53 trillion in 2011 to Shs1.46 trillion in 2012. The drop came at the back of a bad financial year that was overshadowed by low disposable incomes, and high lending rates.
Explaining the drop in customers’ loans and advances, Mr Fred Mugisha, the communications manager of Stanbic said: “Slowdown in economic activity (as the central bank battled to control inflation) significantly impacted our customers especially the business customers. Their loans appetite reduced as there was limited room for growth as well as ability to service additional facilities.”
However, the bank managed to register a 7.4 per cent increase in profits after tax in the same period. It recorded Shs130 billion profits after tax in 2012, Shs9 billion more than the Shs121 billion gathered in 2011.
Between 2011 and 2012, commercial banks experienced rough times with some of their clients - especially traders threatening to shun their banking services. This was after commercial banks increased their lending rates to an average of 29 per cent.
The commercial banks’ high lending rates had been triggered by Bank of Uganda (BoU)’s deliberate decision to increase the Central Bank Rate to curb inflation that had increased to 30.4 percent in October 2011. According to BoU statistics, there are slightly above 3.5 million active bank accounts of which about half a million were Stanbic customers.
There are about 24 commercial banks, majority of which mainly operate from urban and semi-urban areas, a factor that limits their clientele to a particular group of the citizenry.