What you need to know:
Promise. Stanbic will reduce its prime lending to 20 per cent this year if the CBR comes down to 14 per cent.
Kampala. Stanbic Bank Uganda Limited has announced it will be lending more to Small and Medium Enterprises (SMEs) this year to facilitate trading activities in Uganda’s business environment.
The bank says the decision to focus on consumer lending is to continue growing its already profitable loan book, alongside other business interests, which helped the bank to register impressive profits in 2015. Stanbic realised a net profit of Shs150.8 billion, a growth of 12 per cent up from Shs135 billion in 2014.
Releasing their financial results at Kampala Serena Hotel last Friday, the chief executive officer of the bank, Mr Patrick Mweheire, said: “We shall be lending more to the SMEs this year to facilitate trade because trade is a big driver and offers huge opportunities for us in consumer lending.”
Mr Mweheire said there has been a pickup in credit growth due to faster growth in consumer goods particularly soft drinks, manufacturing and real estate on the commercial side which offers potential market for consumer lending.
Much as Uganda remains predominantly an agriculture country with high percentages of commodity exports being agricultural produce, Mr Mweheire said there is still slower growth for bank loans in the sector.
The bank’s loan book, Mr Mweheire said, grew by a healthy 20 per cent, with a closing balance of Shs2.2 trillion in 2015 up from Shs377 billion in 2014.
Even though Stanbic has seen impressive growth in its loan book, according to Mweheire deposits are not growing as required.
“Deposits grew by 12 per cent to average of Shs3.1 trillion up by 12 per cent from 2014,” he said.
Bank of Uganda (BoU) last tightened its monetary policy to control inflation rate and maintain stability in the foreign exchange market, however, lately things have changed with BoU lowering the Central Bank Rate (CBR) from 17 to 16 per cent.
Now BoU forecasts that both headline and core inflation will remain in the range of 6.5 plus 1 per cent in the first half of 2016 before gradually declining to the medium-term target of 5 per cent in the first quarter of 2017.
Last year Uganda saw a sharp depreciation of the Shilling, high interest rates, elevated levels of inflation, and uncertainties surrounding the general elections which all contributed to slowdown in economic activities.