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2018 HALF YEAR RESULTS
Stanbic Bank Uganda
UGANDA IS OUR HOME WE DRIVE HER GROWTH
USHS 1.1 billion
CSI INVESTMENT
USHS 96.1billion
NET PROFITS
1%53%
USHS1.7trillion
OFF BALANCE SHEET
USHS2.3 trillion
CUSTOMER LOAN BOOK
13%
USHS 3.7 trillion
DEPOSITSGROWTH
16%
Describe your 2018 half year performance and tell us some of the main key drivers?
We delivered a solid performance over the past six months due to the strength of our diversified business. I am pleased to announce that even in a challenging
environment, our Profits After Tax grew from UGX 95.4 Billion in June 2017 to UGX 96.1 Billion at the end of June 2018 and Customer deposits grew an impressive 16.2% to UGX 3.75 trillion up from UGX 3.22trillion in June 2017.
With a leading customer loan portfolio of UGX 2.3 Trillion and off-balance sheet portfolio of UGX 1.7 Trillion, Stanbic remains a key enabler in the agriculture, manufacturing, construction and trade sectors. But more importantly, we have a deliberate focus on supporting the growth of the SME segment of the economy given that they generate 80% of manufacturing output and create 90% of new jobs in the economy.
The bank’s total assets of UGX 5.1 Trillion are up by 7.4%% from the previous year of UGX 4.8 trillion meaning we are in a much stronger position to support major development projects and further facilitate economic growth.
What is your assessment of the economy, are we on the right path to recovery?
We have turned the economic growth conundrum corner; that I can confidently say. I was initially concerned that the Uganda’s GDP growth was in
despair. To place this into context, if you look at Uganda, between 1990 and 2011, we had two decades of between 7 % and 7.5% growth, but in 2012/13 we couldn’t even make 4.5%. Ordinarily, 4% is not worrying, but for Uganda it is not good enough because our population is growing at about 3.5%. We, therefore, need to be in the region of 7% to be able to get people out of poverty to have real inclusive growth.
But now we are beginning to see 6% and 6.5% in the last couple of quarters, a sign that we are turning the corner. Private sector credit
growth is also beginning to bounce back- at about 12 % after some anaemic growth the last couple of years. We are finally seeing growth in personal borrowing, agriculture, manufacturing and services; they have all turned the corner. I am very optimistic.
Notwithstanding that we have taken a hit on the currency in the last couple of months but partly for the right reasons. The currency is weakening partly because import demand is up showing renewed economic activity. There is huge demand for dollars which simply did not exist before, trade is back. That being said, its partly because oil prices are back up to USD 70 per barrel and subsequently our oil import bill has gone up by almost USD 300 million.
But the challenge now is how we make that growth consistent and more inclusive so that we are uplifting everybody. How do we improve the quality of growth? That is the USD 64 million question.
Despite the lowering of the CBR, there has been slow uptake of bank credit. How is Stanbic encouraging the private sector to borrow?
Stanbic has matched every single movement of the CBR for the last 18 months; reducing our prime lending rate from 25% to 17% today. The bank has developed and introduced a number of new
products that are a lot more targeted and therefore should make it a lot more attractive to borrow. The tailored products include our enterprise banking offerings that are targeted to SMEs, personal loans solutions, home loans and many more.
Agriculture remains Uganda’s most important economic sector, what is the bank doing to promote the sector?
Stanbic Bank has the largest active Agricultural loan book in the country. In addition, our wide branch network spread across the country ably supports the rural areas. This is particularly the case in the peak harvest
periods when we provide the much-needed financing and lines of credit that allow large
scale buyers to purchase produce from small holder farmers. Just to illustrate the importance we place on the agricultural sector of the UGX 200 Billion in new loans lent out over the past six months almost 35% went specifically towards Agricultural financing. Looking to the future, we plan to be more involved with small holder farmers by developing products more suited to their size and needs hence the reason we recently launched an Agri-financing partnership with Consortium for enhancing University Responsiveness to Agribusiness Development Limited (CURAD).
Over the period, Stanbic has launched a number of new business products and services (Bancassurance & Agent Banking), how are these performing?
Uptake of the new services has been very impressive with many of our clients making use of the alternative channels because of the convenience they provide. As far as agency banking is concerned, we have trained 800
agents who are active in the field with many more to come online over the next 6 Months. Agency banking transactions are by far the fastest growing with an estimated 1.6 million transactions for the full year 2018. Regarding Bancassurance, staff have been trained and the product is now available across most of our branch network. Our objective as a bank in introducing these services is to bring down our cost to serve and pass on the benefits to our clients.
Digital technology is an increasingly important part of your service offering, what new products can your customers look forward to?
We continue to improve our digital banking solutions to make it easier for our customers to enjoy the banking experience with us. One of our more innovative and practical solutions has been the introduction of our intelligent bulk Cash
Deposit Machines. These ATM machines are especially popular with small and medium sized business owners because they no longer need human interaction, yet they can access a
full range of banking services 24 hours a day. Looking to the future, we will enhance agent banking and make it more convenient for our customers while improving our app and online banking offering for our customers.
Oil and Gas has the potential to transform Uganda’s social economic outlook, what role is the bank playing in the development of the sector?
Investments in Uganda’s Oil and Gas sector will only have long term sustainable benefits to the country if a reasonable number of local companies are given the opportunity to participate in its development. Having recognized
that industry standards remain high and few companies have experience, we decided to help bridge the gap by supporting up-skilling of local SME companies through a Business incubator. The project was launched in May and so far 34 companies have graduated and our long-term objective is to have up to 500 companies graduate annually. About USD 15 billion is going to be spent in the sector over the next three years. How do we ensure that a minimum of 30% of this USD 15 billion is spent in the local ecosystem. In addition, Stanbic was chosen as one of two financial advisors with the responsibility of sourcing and arranging financing on the USD 2.5 Billion Uganda - Tanzania crude oil pipeline.
Looking ahead, what are the bank’s focus areas and priorities over the next 6 months?
Our Priority remains ensuring our clients’ needs are appropriately and effectively met. We will focus on strengthening our propositions by providing solutions
that meet our clients’ needs and help them achieve their aspirations.
We strongly believe that relentless focus on the client is the primary reason for our double-digit balance sheet growth across client deposits, Loans and trade and also the reason for Client revenue growth of ~8% in the first half of the year. We will keep this energy into the second half of the year through customizing services,and client journeys.
Stanbic Bank Uganda Limited. A financial institution regulated by Bank of Uganda. License Number A1. 013
HIGHLIGHTS EUROMONEY AWARD WINNER 2018UGANDA’S BEST BANK
GLOBAL FINANCE AWARD WINNER 2018 UGANDA’S BEST BANK
PATRICK MWEHEIRE
CHIEF EXECUTIVE
STANBIC BANK UGANDA LIMITEDSUMMARISED UNAUDITED
FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2018
3. SUMMARY STATEMENT OF FINANCIAL POSITION
Unaudited as at
30 June 2018 Unaudited as at
30 June 2017 Audited as at
31 Dec 2017
Shs’ 000 Shs’ 000 Shs’ 000
Assets
Cash & balances with Bank of Uganda 492,074,761 674,494,747 856,532,804
Derivative assets 4,292,000 23,647,091 12,117,502
Government securities -FVPL 246,100,311 426,005,670 392,911,207
Government securities - FVOCI 664,841,957 607,482,240 516,269,586
Other investment securities 74,489 67,737 71,906
Current income tax recoverable 28,349,833 13,732,313 23,748,226
Loans and advances to banks 978,366,641 751,542,515 1,100,636,288
Amounts due from group companies 202,909,768 83,208,448 177,449,478
Loans and advances to customers 2,267,615,236 2,004,163,037 2,133,986,423
Other assets 70,767,746 49,328,354 47,493,184
Property and equipment 49,091,765 67,829,152 69,292,586
Goodwill and other intangible assets 115,352,206 75,664,720 71,909,841
Prepaid operating leases 83,153 93,491 88,322
Deferred tax asset 9,894,113 - 1,651,991
Total assets 5,129,813,979 4,777,259,515 5,404,159,344
Shareholders' equity and liabilities
Shareholder's equity
Ordinary share capital 51,188,670 51,188,670 51,188,670
Fair value reserves 1,773,900 13,791,943 19,788,336
Statutory credit risk reserve - 22,908,518 19,171,113
Retained earnings 782,410,164 673,263,136 692,131,502
Proposed dividend - - 90,000,000
Total shareholders equity 835,372,734 761,152,267 872,279,621
Liabilities
Derivative liabilities 36,834,280 4,600,764 4,211,626
Customer deposits 3,749,728,823 3,226,574,935 3,620,945,573
Deposits from Banks 83,232,076 232,025,493 342,769,174
Amounts due to group companies 40,799,842 265,947,154 266,614,006
Borrowed Funds 14,100,554 15,461,191 16,364,653
Other liabilities 292,157,118 198,961,009 208,173,495
Subordinated bonds/debt 77,588,552 71,918,539 72,801,196
Deferred tax liability - 618,163 -
Total liabilities 4,294,441,245 4,016,107,248 4,531,879,723
Total equity and liabilities 5,129,813,979 4,777,259,515 5,404,159,344
2. SUMMARY STATEMENT OF COMPREHENSIVE INCOME
Unaudited six months to 30 June 2018
Unaudited six months to 30 June 2017
Audited year ended
31 Dec 2017
Shs' 000 Shs' 000 Shs' 000
Profit for the period: 96,056,242 95,419,527 200,467,790
Other comprehensive income:
Net (gains)/loss on financial instruments-FVOCI (18,139,609) 10,720,820 16,717,213
IFRS 9 Adjustments -FVOCI 125,173
Total comprehensive income for the period 78,041,806 106,140,347 217,185,003
4. SUMMARY STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2017 Share capital Fair value
reserves
Statutory credit risk
reserve Proposed dividends
Retained earnings Total
Shs’ 000 Shs’ 000 Shs’ 000 Shs’ 000 Shs’ 000 Shs’ 000
At 1 January 2017 51 188 670 3 071 123 22 893 968 60 000 000 577 788 232 714 941 993
Net change in available for sale investments - 16 717 213 - - - 16 717 213
Profit for the year - - - 200 467 789 200 467 789
Total comprehensive income for the period - 16 717 213 - - 200 467 789 217 185 002
Transactions with owners recorded directly in equity
Dividend paid - - - (60 000 000) - (60 000 000)
Interim dividend paid - - -
General credit risk reserve - - (3 722 855) 3 722 855 -
Equity settled share based payment transactions - - - - 152 626 152 626
Proposed dividend - - - 90 000 000 (90 000 000) -
Balance at 31 December 2017 51 188 670 19 788 336 19 171 113 90 000 000 692 131 502 872 279 621
Unaudited six months to 30 June 2018
Unaudited six months to 30 June 2017
Audited year ended
31 Dec 2017
Shs’ 000 Shs’ 000 Shs’ 000
Interest and similar income 188,206,204 203,435,666 403,527,401
Interest expense and similar Charges (18,868,293) (25,341,305) (50,780,272)
Net interest income 169,337,911 178,094,361 352,747,129
Fee and Commission Income 75,098,912 68,789,639 135,830,032
Fee and Commission expenses (3,349,267) (2,382,189) (4,583,746)
Net Fees and commission income 71,749,645 66,407,450 131,246,286
Net trading income 78,227,050 68,881,096 144,964,170
Other operating loss/ income 1,710,451 428,542 7,047,223
Total operating income 321,025,057 313,811,449 636,004,808
Impairment charge for credit losses (10,962,730) (14,357,588) (28,922,014)
Total income after credit impairment charge 310,062,327 299,453,861 607,082,794
Employee compensation and related costs (73,551,124) (72,134,573) (141,491,545)
Other operating expenses (103,549,995) (98,841,145) (199,925,290)
Profit before income tax 132,961,208 128,478,143 265,665,959
Income tax expense (36,904,966) (33,058,616) (65,198,169)
Profit after tax 96,056,242 95,419,527 200,467,790
Earnings per share Basic & diluted** 3.75 3.73 3.92
Dividends
Final dividends proposed - - 1.76
1. SUMMARY INCOME STATEMENT
A copy of this statement can be obtained on our website at www.stanbicbank.co.ug. The financial statements were approved by the Board of Directors on 6th August 2018.
Mr. Japheth KattoChairman
Mr. Patrick Mweheire Chief Executive
Mr. Samuel Zimbe Director Company Secretary
*Half year position has been annualised
Mrs. Candy Wekesa Okoboi
5. STATEMENT OF CASHFLOWS
Unaudited six months to 30 June 2018
Unaudited six months to 30 June 2017
Audited year ended
31 Dec 2017
Shs' 000 Shs' 000 Shs' 000
Cash flows from operating activities
Interest received 165,824,422 219,377,994 397,013,080
Interest paid (17,590,275) (26,574,041) (50,366,037)
Net fees and commissions received 75,467,133 66,547,426 137,555,397
Net trading and other Income/recoveries 83,921,747 75,716,140 161,244,419
Cash payment to employees & suppliers (168,254,276) (155,291,053) (345,757,785)
139,368,750 179,776,467 299,689,074
Changes in operating assets and liabilities
Taxes Paid (42,028,222) (36 963 857) (83 959 360)
Increase/Decrease in Derivative assets 7,825,502 (13 580 474) (2 050 885)
(Increase)/Decrease in Government securities- available for sale (174,307,280) (514 618 049) 81 767 514
Increase/Decrease in Government securities- Trading 146,810,896 (175 521 399) (142 426 936)
Increase in cash reserve requirements (9,700,000) (8 560 000) (42 540 000)
Increase in Loans & Advances to customers (151,300,721) (61 329 639) (188 677 753)
Increasein other assets (26,994,633) (143 126) (4 481 259)
Increase in Deposits from customers 127,505,232 169 302 908 562 026 574
(Decrease) /Increase in Deposits from banks (259,537,098) (61 701 234) 49 042 447
(Decrease) /Increase in Amounts due to group companies (225,814,164) 23 141 908 23 808 760
Increase in Derivative liabilities 32,622,654 4 008 629 3 619 491
Increase/Decrease in Other liabilities 90,210,194 (803 830) 44 667 079
Net cash outflows from operating activities (345 338 889) (496 991 696) 600 484 746
Cash flows from investing activities
Purchase of property & equipment (5,067,869) (13 786 442) (25 130 425)
Purchase of computer software (33,108,993) - -
Proceeds from sale of property & equipment 25,093 253 619 334 534
Net cash used in investing activities (38 151 769) (13 532 823) (24 795 891)
Cash flows from financing activities
Dividends paid (90,000,000) (60 000 000) (60 000 000)
Increase/Decrease in subordinated debt 4,787,356 (218 847) 4 785 289
(Decrease) /Increase in Borrowings (2,264,099) 3 881 827 663 810
Net cash flows used in financing activities (87 476 743) (56 337 020) (54 550 901)
(Decrease)/Increase in cash and cash equivalents during the year (470,967,402) (566 861 539) 521 137 954
Cash and cash equivalents at beginning of the year 2,140,716,931 1 619 578 977 1 619 578 977
Cash and cash equivalents at the period ended 1,669,749,529 1 052 717 438 2 140 716 931
Stanbic Bank Uganda Limited. A financial institution regulated by Bank of Uganda. License Number A1. 013
Six months ended 30 June 2017
At 1 January 2017 51 188 670 3 071 123 22 893 968 60 000 000 577 788 232 714 941 993
Net change in available for sale investments - 10 720 820 - - - 10 720 820
Profit for the year - - - - 95 419 527 95 419 527
Total comprehensive income for the period - 10 720 820 - - 95 419 527 106 140 347
Transactions with owners recorded directly in equity -
Dividend paid - - - (60 000 000) - (60 000 000)
General credit risk reserve - - 14 550 - (14 550) -
Equity settled share based payment transactions - - - 69 927 69 927
Balance at 30 June 2017 51 188 670 13 791 943 22 908 518 - 673 263 136 761 152 267
Six months ended 30 June 2018
At 1 January 2018 51 188 670 19 788 336 19 171 113 90 000 000 692 131 502 872 279 621
Changes on initial application of IFRS9 - (25 088 479) (25 088 479)
Restated Balance at 1 January 2018 51 188 670 19 788 336 19 171 113 90 000 000 667 043 023 847 191 142
Net change in Other Comprehensive Income - (18 014 436) - - - (18 014 436)
Profit for the year - - - - 96,056,242 96,056,242
Total comprehensive income for the period - (18 014 436) - - 96,056,242 78,041,806
Transactions with owners recorded directly in equity -
Dividend Paid - - - (90 000 000) - (90 000 000)
General credit risk reserve - - (19 171 113) - 19 171 113 -
Equity settled share based payment transactions - - - 139 786 139 786
Balance at 30 June 2018 51 188 670 1 773 900 - - 782,410,164 835,372,734
4. SUMMARY STATEMENT OF CHANGES IN EQUITY CONT’D
STANBIC BANK UGANDA LIMITEDSUMMARISED UNAUDITED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
STANBIC BANK UGANDA LIMITEDSUMMARISED UNAUDITED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018KEY PERFOMANCE INDICATORS
1. NET LOANS AND ADVANCESLoans and advances increased by Ushs 263 billion {13.2%} as at 30th June 2018 compared to same period last year 2017. As the economy rebounded and our lending interest rates dropped, this supported good credit growth across our customer segments.
2. DEPOSITS FROM CUSTOMERSCustomer deposits grew by Ushs 523 billion {16.2%} as at 30th June 2018 compared to same period last year 2017. This strong growth was supported by our strong customer focus executed through our client eco systems and nurturing new customer relationships. 3. TOTAL ASSETSTotal assets grew by Ushs 353 billion {7.4%} year on year. This strong growth was supported by strong customer deposit growth with excess liquidity being appropriately deployed across the different asset classes, mainly customer loans, in government securities and interbank lending.
4. SHARE HOLDERS EQUITYShareholders equity grew by Ushs 74 billion {10%} compared to the same period last year. This growth was largely driven by growth in the profits for the period.
5. TOTAL INCOME (NIR/NII)Total income increased by Ushs 7 billion, representing a 2.3% increase over the same period in 2017. The increase was seen on Non interest revenue (NIR) of 12% while the Net interest income (NII) dropped by 5% mainly due to the downward trend of interest rates. The income distribution split was at 47% to 53% on NIR and NII respectively compared to last year which was at 43% versus 57%.
6. PROFIT AFTER TAX (PAT)The net profit for the first half of 2018 closed at UShs 96 billion, 0.7% year on year increase. The slight uptick in profit is largely attributed to growth in non-interest revenues supported by growth in customer transactions. Operating costs were also well managed, growing by only 3.6% year on year and Credit risk also remained very strong with Credit loss ratio improving to 0.9%.
7. OFF BALANCE SHEETThis grew by Ushs 607 billion 53% compared to 30th June last year. Trade finance contingent balance are off-balance sheet items which include guarantees, letters of credit and bid bonds.
KEY RATIOS H1 2014 H1 2015 H1 2016 H1 2017 H1 2018
PROFITABILITY 1
Return on average equity(ROE) a 32.1% 27.5% 36.3% 27.7% 22.9%
Return on assets(ROA) b 4.0% 3.7% 5.2% 4.1% 3.8%
EFFICIENCY 2
Cost to income 52.4% 55.8% 50.0% 51.4% 51.9%
LIQUIDITY 3
Loan to deposit ratio 80.2% 79.6% 65.6% 62.1% 60.5%
ASSET QUALITY 4
Credit loss ratio(CLR) a 2.6% 1.7% 1.6% 1.4% 0.9%
Non performing loan ratio(NPL) b 4.6% 1.6% 1.9% 3.8% 5.9%
CAPITAL 5
Capital adequacy ratio(CAR)
Tier I a 18.2% 15.6% 14.1% 18.8% 15.4%Tier I + Tier II b 20.6% 17.0% 17.1% 22.8% 18.2%
1. NET LOANS AND ADVANCES
-
500
1 000
1 500
2 000
2 500
2014 2015 2016 2017 2018
Ush
s' b
illi
on
s
CAGR9.4%
1,582
1,845 1,864
2,2682,004
13.2%
3. TOTAL ASSETS
3,415 3,847
4,506
-
1 000
2 000
3 000
4 000
5 000
6 000
2014 2015 2016 2017 2018
Ush
s' b
illi
on
s
CAGR10.7%
4,777
7.4%
6. PROFIT AFTER TAX (PAT)
Ush
s' b
illio
ns
Ush
s' b
illio
ns
0
20
40
60
80
100
2014 2015 2016 2017 2018
68
95
68
107
CAGR9.4%
0.7%
7. OFF BALANCE SHEET 8. CREDIT IMPAIRMENT
0
500
1000
1500
2000
2014 2015 2016 2017 2018
271434
874
1,150
1,757
CAGR59.6%
53%24%
4. SHARE HOLDERS EQUITY
Ush
s' b
illi
on
s
-
200
400
600
800
1 000
2014 2015 2016 2017 2018
CAGR14.9%
428466
761
627
835
10%
2. DEPOSITS FROM CUSTOMERS
-
1 000
2 000
3 000
4 000
2014 2015 2016 2017 2018
Ush
s' b
illi
on
s
CAGR17.4%
1,9722,319
2,839
3,7503,227
16.2%
5. TOTAL INCOME (NIR/NII)
Total Income NIR Total Income NII
96
HALF YEAR JAN-JUN
HALF YEAR JAN-JUN
HALF YEAR JAN-JUN
HALF YEAR JAN-JUN
HALF YEAR JAN-JUNHALF YEAR JAN-JUN
HALF YEAR JAN-JUN
HALF YEAR JAN-JUN
CAGR: Compounded Annual Growth Rate
5,130
CAGR 14.9%U
shs'
bill
ions
Ush
s' b
illio
ns
136 144184 178 169
108117
150136 152
0
50
100
150
200
250
300
350
2014 2015 2016 2017 2018
8%28%
-3%
-5%
6%
29%
-10%
12%