Stanbic Bank chief executive officer Mumba Kalifungwa
It's barely a month since Zambian Mumba Kalifungwa took over as Stanbic’s managing director, ending almost a year’s search to fill one of the top positions in the banking sector.
His arrival almost coincided with the release of the bank’s financial results early this week, which returned excellent performance in the 12 months to December 2024.
Of course, Mumba could have had no part in how the bank performed, but the results will be key in his work ahead.
During the 12 months, Stanbic capitalised on a combination of factors, among which included an increase in lending, consistency in repayment of short-term loans and improvement in assets to improve its overall performance.
For instance, there was a pickup in the growth of short-term loans, ranging from three to six months, especially among business clients.
Mr Ronald Makata, the Stanbic chief financial and value management officer, said while releasing the 2024 financial results that the bank’s balance sheet registered growth in customer loans and customer deposits driven by key initiatives in the public, energy, and education sectors.
This, as a result, drove up net interest income to Shs760b, representing a 7.2 percent growth from Shs709b in 2023.
“Loan growth was seen in all business units of personal and private banking supported by asset campaigns from the start of the year. While other units [gained] from growth in demand for short-term funding and medium-term loans,” he said, noting that the bank also registered improvement in asset quality under business and commercial banking and relative stability under corporate investment banking.
Stanbic business and commercial banking segment caters to businesses that offer a range of banking solutions and services, including accounts, loans, and online banking, to support customer needs and growth.
Mr Makata further indicated that during the 12 months to December 2024, loan provisioning dropped due to improvement in retail and small and medium enterprises recoveries.
The bank also registered a drop in impairments, which in the period dropped from Shs69b in 2023 to Shs34b.
The drop represents a 51 percent decline, which was “significantly lower than the market average and below the bank’s internal thresholds, driven by pro-active client engagement and collection strategies”.
Net loans and advances grew to Shs4.3 trillion, representing a 3.5 percent growth from ShsShs4.2, while customer deposits significantly rose to Shs7.1 trillion or by 12.2 percent from Shs6.3 trillion.
Total revenue grew to Shs1.29 trillion from Shs1.19 trillion, which represented a growth of 8.6 percent, driven by a diversified revenue model, including net interest income movement attributed to growth in average loans and advances and financial investments and non-interest revenue supported by growth in client and transaction volumes.
Non-performing loans reduced to Shs4.5b, translating into a percentage of 1.5 percent.
However, operating costs rose to Shs612b from Shs584b, largely due to increased investment in people and technology.
But on the whole, the strong earnings returned a net profit of Shs478b, a growth of 16.2 percent, while return on equity stood at 24.3 percent – thus delivering value to shareholders.
Return on equity gauges a company’s profitability and how efficiently it generates profits.
Shareholders' equity grew by 9.2 percent to Shs2.05 trillion from Shs1.88 trillion
The bank also continues to pursue an aggressive digital agenda, which, Mr Francis Karuhanga, the Stanbic Holdings chief executive officer, said digital channels continue to dominate transactional volumes.
“Branch contribution has consistently dropped with migration of key services to digital channels,” he said, noting that services such as lending have been eased with access reduced to as low as two minutes for pre-approved clients.
Mr Karhanga also indicated that branch transaction activities have been declining over the last four years, dropping to just 5.7 percent from 11.5 percent in 2020.
This has been supported by the reduction in the installation of semi-digital channels, such as automated teller machines and cash deposit machines, from 39.6 percent in 2020 to just 19.8 percent.
Others have been an increase in the activities of agency banking from just 10.5 percent in 2020 to 23.8 percent, while those of pure digital channels, including Flexipay have risen from 38.4 percent in 2020 to 50.6 percent.
Thus, as Mr Mumba settles in, he will have to ensure that he sustains focus on maintaining the growth trajectory, while continuing to serve as a catalyst for sustainable economic development.
He will also have to innovate in a rapidly changing banking industry due to changes in technology and continue to drive shareholder value.
