Absa Bank Uganda managing director Mumba Kalifungwa. PHOTO | POOL Reduced bad loans helped boost Absa Bank Uganda’s net profits to Ush111.6 billion ($31.1 million) in year ending December 31, 2021, from Ush41.7 billion ($11.6 million) in 2020, making the subsidiary the second most profitable unit in the region after Absa Bank Kenya.
Absa has proposed Ush50 billion ($14.2 million) in dividends for the year ending December but have not received approval from Bank of Uganda (BOU).
Reduced bad loans helped boost Absa Bank Uganda’s net profits to Ush111.6 billion ($31.1 million) in year ending December 31, 2021, from Ush41.7 billion ($11.6 million) in 2020, making the subsidiary the second most profitable unit in the region after Absa Bank Kenya.
The Absa Bank Uganda on April 12 published results that showed its revenue surged to Ush370.8 billion ($103.7 million) in 2021, from Ush201.6 billion ($56.3 million) in 2020, driven by more deposits and lower costs.
Assets also slightly grew from Ush3.6 trillion ($1 billion) in 2020 to Ush3.9 trillion ($1.1 billion) driven by investments in tradeable securities, which raked in Ush1.5 trillion ($422.5 million), from Ush1.1 trillion ($315 million) in 2020.
Absa has proposed Ush50 billion ($14.2 million) in dividends for the year ending December but have not received approval from Bank of Uganda (BOU).
In March 2020, the Bank of Uganda issued a directive suspending dividend payments as Covid-19 reached Uganda. The payout approval delay may mean the suspension is not yet lifted.
BoU imposed dividend restrictions to allow banks build their capital, providing a buffer to absorb any future losses, amid a slowdown in economic activities due Covid-19 restriction.
Stanbic Bank Uganda is also waiting for BoU to approve Ush111 billion ($31.2 million) proposed dividend for the full year ended December 31, 2021.
Adam Mugume, the executive director of Research at the Bank of Uganda, said only banks that have strong capital to withstand shocks and support their business growth will be permitted to give out dividends.
Banks will have to convince Bank of Uganda that it is not the credit relief and liquidity measures that have improved their earnings and will remain in business the measure are withdrawn.“We are against the aspect of a bank benefiting from BoU liquidity and credit relief support measures to make money for themselves and pay dividends,” said Dr Mugume.In its Quarterly Financial Stability Review of December 2021, BOU found Absa Bank Uganda, Stanbic Bank Uganda, Standard Chartered Bank, […]
