Summary:

• Despite industry challenges and the downsizing of smaller banks, major banks in Uganda, including Stanbic Uganda Holdings Ltd, Centenary Bank, ABSA, Standard Chartered Bank, and Housing Finance Bank, have reported strong profits in 2023.

---

Uganda’s largest banks, including Stanbic Uganda Holdings Ltd, Centenary Bank, ABSA, Standard Chartered Bank, and Housing Finance Bank, have experienced significant profit growth in 2023, despite challenges faced by smaller banks. The smaller banks were forced to divest their shares or downgrade to credit institutions due to revised capital requirements set by regulators in order to remain operational.

These major banks recorded double-digit profit growth, surpassing expectations and earning billions for their shareholders. This achievement is particularly remarkable considering the geopolitical tensions and high inflation that characterized the economic environment during this period.

The surge in inflation actually benefited larger banks, as it prompted the central bank to raise interest rates. This allowed the banks to charge borrowers higher interest rates on loans, contributing to their increased profitability.

Stanbic Uganda Holdings Ltd, a part of the Standard Bank Group, Africa’s leading bank by assets, saw a 15.2% rise in profit after tax, reaching Shs412 billion. This growth was primarily driven by loans and advances.

Centenary Bank, an indigenous bank with strong foundations from the Catholic Church, reported a 19% increase in profit after tax, amounting to Shs297 billion. The bank attributed this growth to interest on marketable securities, fees and commissions, and interest on loans and advances.

ABSA Uganda, a subsidiary of the African Bank of South Africa, also experienced double-digit profit growth, with net income rising by 15.6% to Shs146 billion. The bank attributed this success to a 42% growth in transactional banking and trading income.

Standard Chartered Bank doubled its profits from Shs40 billion to Shs80 billion. The bank’s CEO, Sanjay Rughani, attributed this strong performance to sustained income momentum across key business lines and significant reductions in credit impairments.

Housing Finance Bank reported an 11.3% increase in net profit, reaching Shs65.1 billion, driven by an increase in interest income.

On the other hand, smaller banks such as dfcu, Bank of Baroda, Bank of India, and Tropical Bank experienced declines in profits due to increased expenditures or other factors.

Despite the challenges faced by the banking industry, financial experts predict that the financial institutions will generate higher revenues in the current financial year due to projected economic growth and ongoing investments in the oil and gas sector.

In response to regulatory requirements, some banks have taken new growth paths through acquisitions or downgrading their operations. Finance Trust Bank has opted to sell an 80% stake to Access Bank PLC, while Salaam African Bank has acquired Top Finance Bank Uganda. Additionally, three banks, including ABC Capital Bank, Guaranty Trust Bank, and Opportunity Bank, have been approved by the Bank of Uganda to downgrade their operations to credit institutions.

Overall, Uganda’s major banks have demonstrated resilience and achieved significant profits amidst industry challenges, positioning themselves for future growth and stability.