Stanbic bank blames reduced profits on high operating costs
Posted Wednesday, April 16 2014 at 01:00
Factor. Effects of unstable economy also led to reduced demand for loans, deposit growth.
High operating costs coupled with the lag effects of the turbulent economic challenges suffered about three years ago, are still evident in Uganda’s banking industry, as banks continue posting mixed 2013 financial results.
Although three banks including Kenya Commercial Bank (Uganda), Diamond Trust Bank and Dfcu, have so far reported profit growth, Stanbic (the largest bank by assets) and Imperial Bank have reported a profit decline and loss, respectively.
According to Stanbic’s audited financial results for the year ending December 31, the bank posted a 22.1 per cent decline in net profit to Shs101.8 billion compared to Shs130.8 billion posted over the same period in 2012.
Diamond Trust Bank on the other hand grew its profit by 16.6 per cent to Shs23.55 billion last year while KCB grew six fold to Shs6.7 billion from Shs1.1 billion.
Dfcu’s profit on the other hand increased to Shs34.8 billion, from Shs29.8 billion in 2012.
Imperial Bank reported an increase in losses for the year, increasing to Shs1.9 billion from Shs1.7 billion in 2012.
The Stanbic managing director, Mr Philip Odera, attributed the slowdown in the bank’s profit growth to the lag effects of the 2011 turbulent economic challenges which have to date subdued demand for loans and deposit growth, coupled with high operating costs the bank incurred last year when it invested in a new technology platform that seeks to offer much more competitive services and products.
“High inflation affected customers’ ability to effectively conduct business and businesses are still struggling to recover … thus demand for credit is still weak, Mr Odera told a media and analysts briefing in Kampala yesterday.