Stanbic Bank Uganda pre-tax profit up 24.9%

Stanbic Bank Uganda has reported a significant increase in pre-tax profit, up by 24.9% in 2016, largely fueled by gains from government securities and foreign exchange trades. The top-tier lender has diversified its business, focusing more on high-yield government securities rather than lending to individual customers. Catherine Namujjuzi, Compliance & Risk Manager at Crested Capital, shared insights on Stanbic's strategic shift and future outlook in a recent interview on CNBC Africa. She discussed the bank's growth in loan book, the impact of decreasing lending rates, its forex trading profits, and its approach towards mobile money services. Namujjuzi acknowledged the trend of Stanbic Bank lending less to the ordinary person and increasing its investments in government securities. She explained that the bank's decision was influenced by the high-interest environment and the lower credit risk posed by corporate clients compared to retail clients. Despite the emphasis on government securities, Namujjuzi mentioned that Stanbic is focused on expanding its personal banking book in the future. Regarding the outlook for Stanbic Bank in the mid-term, Namujjuzi expressed optimism about the bank's growth in the loan book. With the reduction in prime lending rates and an increase in private sector credit demand, she believed that Stanbic would see significant momentum in loan growth, especially in the second and third quarters of the year. Namujjuzi anticipated a more balanced growth in personal and investment banking sectors. The discussion also touched upon Stanbic's forex trading profits and hedging activities. Namujjuzi highlighted the bank's commitment to expanding its client base and reducing dependency on forex gains. She emphasized the importance of servicing a broader scope of clients to ensure a more stable performance, even in challenging forex environments. Namujjuzi suggested that by focusing on expanding their balance sheet and tapping into government infrastructure projects, Stanbic could maximize its growth potential. When asked about Stanbic Bank's approach to mobile money services, Namujjuzi clarified that the bank viewed mobile money as a complementary service rather than direct competition. She mentioned that Stanbic was integrating mobile money payment systems to enhance service delivery, particularly for school fee payments. Namujjuzi believed that Stanbic's investment in IT infrastructure would facilitate their transition towards digital and online platforms, enabling them to leverage mobile money services effectively. In conclusion, Stanbic Bank Uganda's strategic shift towards government securities and forex trading has proven beneficial, driving a significant increase in pre-tax profits. The bank's focus on expanding its loan book, leveraging lower lending rates, and embracing digital banking solutions like mobile money positions it well for growth in 2017. With a balanced approach to serving both corporate and individual clients, Stanbic Bank is poised to capitalize on emerging opportunities in Uganda's dynamic banking sector.