Stanchat net profit drops by Shs86b

KAMPALA. Uganda’s second largest bank, Standard Chartered Uganda, paid the price for bad loans in 2015.
In financial results released on Thursday, Standard Chartered net profit dropped by Shs86b to Shs28b in 2015. In the last eight years, this is the lowest profit Standard Chartered has ever posted. The net profit was impacted by exposure to bad debts from some of its customers.

“Furthermore, given the market conditions and the challenges faced by our corporate clients, we undertook a large number of provisions leading to an increase in our bad loan book and thus impacting our profitability,” Mr Herman Kasekende, the CEO Standard Chartered Bank, said in a statement.

Standard Chartered made provisions for bad debts of almost Shs120b in 2015 up from Shs36b in 2014. The bank doesn’t disclose the companies that had problems meeting their loan obligations, however Daily Monitor understands it was mostly from the telecom sector.

The bank is also exposed to a debt of Shs50b owed by Steel Rolling Mills. The bank is seeking to recover this money by selling Steel Rolling Mills assets. The depreciating Shilling in 2015 and slowed economic performance contributed to weak corporate sector.

Loan book
Of Shs1.3 trillion of the loan book, at least Shs527b is owed by large corporate clients.
The bank also recorded a drop in the loan book from Shs1.4trillion in 2014 to Shs1.3 trillion in 2015. Additionally, customer deposits were mostly flat at Shs1.8 trillion.
The rising interest rates in 2015 contributed to the slowed loan book but the bank was able to make more money from the interest.
Interest income rose to Shs242b in 2015 up from Shs208b in 2015. “We have identified our risks and we are dealing with them assertively,” Mr Kasekende said.

The numbers
Shs2.68 trillion
The assets of the bank in 2015

Shs2.65 trillion
The assets of the bank in 2014

Shs117 billion
The expenses of the bank in 2015

Shs74 billion
The expenses of the bank in 2014

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