Investors with shares in listed banks must be working the numbers, following a good harvest of profits for the year ended December 2024. Photo / Michael Kakumirizi
It’s almost payday for investors in equities at Uganda Securities Exchange (USE).
Three banks; dfcu, Stanbic, and Bank of Baroda, will dish out a combined Shs375b in dividends.
The boards have recommended the payouts, but shareholders still need to give the final nod at the pending annual general meetings.
To unpack this, it’s paramount to track where the money came from, how it was spent, made, and ultimately distributed to shareholders.
Dfcu Bank
During the year ended December 2024, dfcu flexed its financial muscles, making every shilling work overtime.
Revenue grew by 1.28 percent to Shs454.91b, with loans (42.06 percent) and government securities (35.01 percent) doing the heavy lifting.
The bank pumped more cash into government securities, raking in a solid 20.7 percent increase, while loans took a 9.69 percent dip - likely due to a more cautious lending approach.
Customers deposits grew by 1.63 percent, the bank kept its loan-to-deposit ratio (which compares the amount of loans it gives out to the deposits it holds) at 48.05 percent, meaning it didn't take on too much risk by lending too much compared to the deposits it had.
This shows the bank was careful but steady in its financial management.
On the cost side, dfcu tightened its belt, with total expenses dropping by 11.84 percent, mainly due to a staggering 85.48 percent recovery on loan impairments.
However, it wasn’t all smooth sailing. Operating expenses jumped 18.01 percent, pushing the cost-to-income ratio up to 64.34 percent.
Still, profitability stole the show. Net profit after tax soared by 151 percent to Shs72.09 billion.
And that’s where the shareholders’ earnings per share skyrocketed from Shs38.39 to Shs96.35, boosting shareholder value.
Equity climbed 9.35 percent, with return on equity hitting 10.69 percent, something that prompted the board to propose a dividend of Shs20.09 per share, more than double last year’s Shs9.1- a sweet reward for patient investors.
With 748 million outstanding shares, dfcu's board has recommended a dividend payout of Shs15.03b, subject to shareholder approval.
Over the past four years, dfcu has shifted gears, investing over Shs600b more in government securities while trimming its private sector loan portfolio by around Shs700b.
This strategic shift toward safer, more profitable investments has paid off - and now, shareholders will cash in.
Bank of Baroda
Bank of Baroda kept the cash flowing in 2024, boosting total income by 16.89 percent to Shs347.82b.
Interest income led the charge, rising 10.66 percent, while non-interest revenue inched up 1.60 percent - a steady but helpful extra push.
When it came to costs, the bank kept things tight. Operating expenses grew by only 1.86 percent, maintaining a lean cost-to-income ratio of 13.87 percent.
The money was put to work, too, with loans up 16.7 percent to Shs1.44 trillion and customer deposits rising by 8.88 percent.
The returns? Solid. Net earnings after tax rose by 15.11 percent to Shs133.95b, while assets grew to Shs3.08 trillion, and return on equity hit 17.67 percent, giving shareholders plenty of reasons to smile.
The board ultimately proposed a dividend payout of Shs60b (Shs4 per share), pending necessary approvals.
Baroda kept costs low, made smart moves, and delivered a solid year.
A decade ago, Baroda’s loans were all about businesses - now, government is its biggest borrower, proving that sometimes, the best customer is the one who prints the money.
Stanbic Bank
Stanbic kept the cash flowing in 2024, with total income rising by 11.8 percent to Shs1.30 trillion. Interest income pulled its weight, growing 7.18 percent, while non-interest revenue outshone expectations with a 10.78 percent increase - proving the bank knows how to earn in more ways than one.
Costs rose by 4.89 percent, but the bank's efficiency sharpened, trimming its cost-to-income ratio to 47.19 percent.
The bank wasn’t just keeping pace; it was growing. Assets soared 11.72 percent to Shs10.40 trillion, deposits ballooned by 12.22 percent to Shs7.1 trillion, and loans grew by 3.52 percent to Shs4.4 trillion.
Return on assets ticked up to 4.60 percent, but return on equity dipped slightly to 21.79 percent - a small trade-off for a stable and solid year.
Net profits rose by 16.18 percent to Shs478.09b, thereby making the board to recommend a dividend payout of Shs300b, which includes an interim dividend already paid out.
Looking back, Stanbic in 2015 was all about private sector loans, with Shs1.9 trillion in loans far outweighing Shs684b in government securities.
Now the gap has closed - 2024’s loans now stand at Shs4.3 trillion, while government securities have surged to Shs2.6 trillion, showing a strategic shift in focus.
What’s fuelling the earnings?
“Simple: banks are doubling down on government securities,” says Alex Kakande, a Chartered Accountant and an auditor with Ernst & Young.
“They are safe, profitable, and don’t come with the headaches of chasing down loan repayments,” he says.
For investors paying attention, the message is clear - if banks are piling into treasury bonds, maybe you should too. Safe, steady, and profitable.
Investors’ reaction
When companies drop their financials, the stock market turns into a high-stakes game of musical chairs - investors scramble, hoping their money lands in the right spot.
Prices swing, fortunes shift, and reactions range from victory dances to panic exits.
By April 2, Crested Capital, a brokerage firm’s trading data painted a clear picture of investor moods:
Bank of Baroda: Demand was sky-high - 139,500 shares wanted, but no one was selling.
Still, 14.22 million shares traded at Shs24.56, nudging the stock price up 0.6 percent.
Dfcu: Buyers lined up for 3,900 shares at Shs247 (above the day's price of Shs239), but sellers ghosted - so, no deals.
Stanbic: Investors wanted 533,900 shares at Shs45, but sellers set the bar higher at Shs46. Eventually, 53,600 shares moved at Shs46.04.
The New Vision outlier
New Vision Printing and Publishing Company Limited, the outlier in the market, failed to match the financial performance of its peers.
In a March 24 notice, managing director Don Wanyama noted the company would post a loss due to the tough business climate - falling traditional newspaper sales, a slowdown in advertising revenue across various platforms, and increasing costs of raw materials and operations.
Despite the grim forecast, the company recorded a reduction in its loss position, which improved from Shs7.5b to just Shs856.9m.
Mr Wanyama had earlier indicated that the company remained optimistic, promising to lead the charge in innovation to ensure a good return on shareholder investments.
The rapidly changing media landscape, with advertisers flocking to online spaces, has impacted the company, but it is now counting on innovations to return to profitability.
In the past 12 years, the company’s share price has plummeted from Shs545 to just Shs152, a 72 percent drop since April 2017.
With this trajectory, projections suggest that New Vision’s valuation could fall to just Shs5 billion by 2026 if the current downward trend continues.
The company’s largest shareholder - government, holds 53.3 percent of the company’s shares and has occasionally stepped in with financial support during times of distress.
In its financials, the company noted that it had already secured Shs25b from government through issuance of 3 percent of non-participatory, non-cumulative, non-redeemable, convertible preference shares, which it had invested in digital media and broadcast, digital outdoor advertising, and a modern printing press.
