Stanbic Bank, Uganda’s leading financial services institution, has released its half-year results for the 2016 financial year. It posted commendable growth on all key metrics and record earnings to further consolidate its leadership position in the industry.
“The bank achieved solid results in the first six months, building on the resilient performance we registered in 2015,” said Mr. Patrick Mweheire the Chief Executive of Stanbic Bank.
“We are very pleased with our performance and the resilience demonstrated by our diverse businesses in the first half of the year. The strength of our diversified business model with multiple revenue streams and the intrinsic operating leverage in the bank really came through with these results. We grew revenues by 28% and profitability by 57%, which demonstrates that if you can listen to your customers, manage your risks and understand your operating environment; anything is achievable,” said Mr. Mweheire.
Looking at the performance of the bank’s total assets, Sam Mwogeza, Chief Financial Officer at Stanbic Bank, stated that the bank’s improved Return on Asset (RoA) of 5.2% was off the back of actions taken to strengthen and protect the earnings of the bank. This was done through effecting appropriate modifications to the bank’s credit risk appetite, establishing and growing diversified revenue streams and leveraging the bank’s funding and cost base through optimal deployment of liquidity and financing.
Consequently the bank was able to post 28% growth in revenues against a 17% growth in total assets and a 14% growth in cost, demonstrating strong leveraging of the bank’s resources to drive revenue growth.
“The modifications to our risk appetite where we deliberately slowed down credit growth on most of our retail lending was off the back of the high interest rate environment and our strong credit processes also ensured that we maintained a commendable credit loss ratio of 1.6%, that was lower than the 1.7% recorded as at June 2015 and is also well below the industry average. This is a further demonstration of the resilience and diversity of the bank’s earnings where slow-down in customer lending activity was compensated for by strong performance from non-customer related revenue streams that grew by 64%,” said Mr. Mwogeza.
In addition to registering solid results, Stanbic Bank managed to close a number of major transactional deals in the six month period, including its role as the lead arranger in the USD114 million syndicated loan to MTN Uganda. The bank also led in the structuring of an interest rate swap, for the Karuma Dam term financing on behalf of the Government of Uganda (“GoU”), which hedged out the risk of future interest rate fluctuations and provided GoU with more certainty on their debt servicing costs.
Looking towards the remainder of this financial year, Mr. Mweheire indicated that the bank is expected to continue on its growth trajectory, especially as the economy picks up over the second half of the year, spurred on by lower inflation and private sector credit driven growth as a result of reductions in the Central Bank Rate.