COVID-19 hits Stanbic Bank profits

Stanbic Bank's profits dropped by 4.9 percent in the first six months of 2020

Stanbic Bank’s profits dropped by 4.9 percent in the first six months of 2020, an indicator that the coronavirus pandemic has not spared even the highfliers in the industry.

The biggest bank in the country still made money with its after-tax-profits topping UGX 127 billion in the six months to June 2020. This is a drop from the UGX. 130 billion the bank made in the first six months of 2019.

Anne Juuko, the Stanbic Bank, Chief Executive Officer described the operating environment as “difficult” but said even then, the profits made were a testament to the bank’s resilience.

Stanbic Bank, with a 21 percent share of the banking industry market was never expected to be struck hard by the pandemic, and the fact that it experienced a slight fall in profits is a pointer to a rough year for the smaller banks.

Stanbic Bank saw one of its key income earners, the Non-Interest Revenue (NIR), that is money earned from Non-Sufficient Funds (NSF) charge, monthly account service charges, inactivity fees, check and deposit slip fees, and advice fees, drop due to business disruptions occasioned by the Covid-19 pandemic.

As fewer people went to the banks or transacted less during lockdown between April and June, it means the bank earned less of this money. Money earned from loans to either individual customers or government grew, which shows that people were still meeting their loan obligations despite the COVID-19 shutdown.

Juuko, who took over Stanbic stewardship in March, said she is committed “to implementing a robust strategy in the current economic conditions.” For Stanbic, almost all growth parameters look good. Customer deposits grew by 1.1trillion shillings – representing a 26.6 percent year-on-year growth.

“This growth was enabled by our strong client ecosystem engagement and simplifying client onboarding,” Juuko said in a statement. Loans to customers increased by UGX. 661 billion in six months to June 2020, an indicator that even as the pandemic blared, the bank was open to lending.

In 2019, Stanbic re-organized its corporate structure, forming a holding the company, Stanbic Uganda Holdings Company Limited, and put the bank under it as a subsidiary.

This year, two more companies have since been added that is the Stanbic Properties Uganda Limited that will hold and manage the real estate business and Stanbic Business Incubator Limited that will manage enterprise development on behalf of the holding company and its subsidiaries.

Patrick Mweheire, the regional group Chief Executive, said they plan to have two more other subsidiaries which will include a stock brokerage subsidiary that will increase financial services offered to Stanbic clients and a financial technology subsidiary to drive the group’s digital agenda.

These subsidiaries are expected to push Stanbic Bank’s reach beyond banking.

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