Banks in 2019: Gap between highfliers and strugglers widens

Two extremes quickly come out of the banks’ 2019 results – those that performed extremely well and others where things went terribly bad, writes ALON MWESIGWA.

The gap between the five leading commercial banks and the five tail holders grew wider that it becomes difficult to conclude whether 2019 was a good year for the sector or not.

On May 1, 2020, the last commercial bank published its results for the year 2019 but one conclusion was clear – as some banks effortlessly rake in billions of shillings in profits, their counterparts at the bottom end struggle to make a footing in the industry.

Five banks – Stanbic, Centenary, Standard Chartered, Absa, and Dfcu – made a whopping Shs 690bn in total net profits, making them the most profitable banks in the industry. Three banks – Stanbic, Centenary and Stanchart – had net profits above Shs 100bn each. Absa and Dfcu’s were above Shs 70bn.

Stanbic’s after-tax-profits topped Shs 259 billion for 2019, up from Shs 215 billion in 2018, cementing its position as the most profitable bank in the country. Its assets hit the Shs 6.6 trillion mark in 2019 from Shs 5.4 trillion in 2018 – almost double the bank that follows.

Patrick Mweheire, former Stanbic Uganda chief executive, described this as ‘great performance”. Stanbic commands a market share of 20.5 per cent.

Centenary bank announced a 45 per cent increase in after-tax profits to Shs 155.9 billion, making it the second most profitable bank in the country. The Catholic church-founded institution remains a bank to watch with its assets expanding by at least Shs 500 billion last year alone to Shs 3.6 trillion. It is soaring on almost all the parameters – lending, customer deposits, and money earned from things like fees and commission.

Standard Chartered, a bank that has focused much on a leaner branch network but wants to have all its customers on digital platforms, made Shs 124bn in net profit. It says in its report that at least 86 per cent of its customers are transacting online. Absa and Dfcu made Shs 78bn and Shs 73bn net profits respectively. For Absa, it was even intriguing.

The bank, which is reporting for the first time as Absa brand after it completed the transition from Barclays last November, also grew its assets to Shs 3.4 trillion

from Shs 2.8 trillion in 2018. This is a testimony that the transition period, which started in 2016 […]

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