Stanbic Uganda Holdings half-year profits exceeded Ush100 billion ($26.9 million) for the first time since it listed on the local bourse in 2007, an achievement driven by strong growth in revenues and low expenses.
The country’s biggest lender’s full-year results, however, reveal a cautious approach towards exploiting big opportunities offered by its new ownership structure amid restrained lending activity.
The company’s profit after tax rose from Ush96 billion ($25.7 million) at the end of June 2018 to Ush134 billion ($36 million) by end of June 2019, while total assets increased from Ush5.1 trillion ($1.4 billion) to Ush6.1 trillion ($1.6 billion) during the same period according to latest financial results.
Interest income grew by 23 per cent to Ush232 billion ($62 million) by end of June 2019 while non-interest income — a revenue source derived from bank charges and commission fees — expanded by 21 per cent to Ush183 billion ($49 million) during the first six months of 2019.
RELUCTANCE
As a result, total revenues jumped by 24.1 per cent to Ush399 billion ($107 million) at the end of June 2019.
Total operating costs rose by 13.7 per cent to Ush201 billion ($54 million) at the end of June 2019 while the cost to income ratio fell from 51.9 per cent in June 2018 to 48 per cent in June 2019, a sign of subdued cost pressures in Stanbic Bank’s operations.
Total loans and advances increased by 21.6 per cent to Ush2.76 trillion ($741.7 million) at the end of June 2019 while total customer deposits grew by 9.7 per cent to Ush4.1 trillion ($1.1 billion) during the same period.
Despite the remarkable half-year earnings, the listed lender appears reluctant to exploit lucrative economic opportunities unlocked by its new holding company structure.
Under the new ownership structure that took effect in April 2019, Stanbic Uganda Holdings became the parent company of Stanbic Bank Uganda and its local subsidiaries, which include SBG Securities Uganda, a stockbroking business and a data vending company soon to be established by Stanbic Africa Holdings.
The latter is the majority shareholder in Stanbic Bank Uganda, with 80 per cent shares. The new holding company structure allows the company to own and invest in land and buildings; a privilege not offered under local banking licences issued by Bank of Uganda for risk management reasons, sources say.However, the listed financial services is unwilling to venture into large scale real estate investments contrary to investor expectations."The holding company structure will […]
