The Independent Uganda: You get the Truth we Pay the Price
Overall industry performance
Overall, the banking industry recorded a 10% growth in net profit to Shs 673bn for the year ended last December, up from Shs 611bn in 2016 excluding Crane Bank and Shs 541bn in 2015, according to Bank of Uganda. Uganda currently boasts of 25 commercial banks.
The industry’s deposits grew by 12% to Shs 18.2trillion last year, up from Shs16.2trillion and Shs 14.2 trillion during the same period under review.
This is the same trend with loans and advances that increased to Shs 11.7trillion last year, up from Shs11.5trillion in 2016 and Shs10.8trillion in 2015.The Non –Performing Loans fell to 4.9% from 10.5% and 5.3% during the same period under review.
Going forward
Suzan Khaiza, a financial advisor working with the Kampala Serena Hotel told The Independent in an interview that the current economic conditions show the need for banks to bemore innovative and come up with new products that suit different categories of customers.
“Our banks seem to have relaxed coming with new products,” she said, “They need to be more creative, coming up with products like those targeting students, ladies, small savings groups, among others.”
Mweheire said the banking sector now needs to leverage technology, data, customer centricity, diversity, and optimizing accessibility to their services to stir their profit growth.He reiterated that Stanbic Bank is finalizing a plan to become a Bank Holding Company (BHC), a step that would enable it venture into other niches such as real estate and brokerage and grow its profits.The bank has already made an application and awaits the central bank’s approval.
On the upside, Bank of Uganda Governor, Emmanuel Tumusiime-Mutebile, said in his Monetary Policy Statement on Feb 13 that there are indications of a revival in private investment activity reflected in the recovery of foreign direct investment, which grew by 18.5 % in 2017 compared to the decline of 30.5% recorded in 2016. Mutebile pointed out the improvement in shilling credit extension recorded at 10.8% in December 2017 compared to 7.9% in December 2016; and increased imports of raw materials and capital goods, which grew by 17.4% compared to a decline of 21.1% in the period under review.
He said economic growth for FY2017/18 is projected to be in the range of 5.0-5.5%, signalling a positive payoff for the current stimulatory monetary policy.
