A photo montage of some bank CEOs/MDs
The Ugandan banking sector remained resilient in 2023 despite weak economic growth prospects, heightened inflation and elevated geopolitical tensions.
Business Focus’ exclusive analysis of banks’ financial statements as of 31st December 2023, shows that 23 banks made a record profit of Shs1.42 trillion in 2023, up from a net profit of Shs1.28 trillion in 2022. Only two banks made a combined loss of Shs19.28bn, with Equity Bank making a shock loss of Shs18.77bn in 2023, up from a profit of Shs45.75bn recorded a year earlier.
It should be noted that for the last eight (08) years, Business Focus has exclusively compiled and analyzed the results of banks every year so as to help customers, partners and stakeholders of these financial institutions to know how their banks performed and help them make informed decisions.
This analysis is also important for students/researchers with a bias in banking and finance as well as policy makers
This website interprets and reports these financial statements in a simple and easy-to-understand manner.
The results show that some banks are struggling to meet Bank of Uganda’s new minimum capital requirements of Shs150bn. Three commercial banks including ABC Capital Bank (U) Ltd, Opportunity Bank and Guaranty Trust Bank (U) Ltd have already failed to meet the new capital requirements and will downgrade from a Tier I Commercial Bank License to a Tier II Credit Institution License effective July 1, 2024. Our analysis shows that more banks are set to downgrade or get acquired (we’ll keep you updated about this story).
Finance Trust Bank has opted to sell an 80% stake to Access Bank PLC, a prominent Nigerian lender operating across more than 20 countries. The deal subjected to regulatory approvals from the BoU and the Central Bank of Nigeria, is expected to be concluded in the first half of 2024.
In a related development, Djibouti’s Salaam African Bank (SAB) has entered the Ugandan market after acquiring Top Finance Bank Uganda, a tier II institution. Salaam Bank is the only fully-fledged Islamic bank operating in Uganda.
A few years ago, I&M Group from Kenya acquired Orient Bank Uganda.
Important to note is that unlike before, more Ugandans are getting into top leadership positions in the banking sector. For example, out of the 25 banks, 16 of them are headed by Ugandans as Managing Directors or Chief Executive Officers. Six banks were being headed by a female MD/CEO as of 31st December 2023, with five being Ugandans.
Most profitable banks
Stanbic Uganda Holdings Ltd (SUHL), whose flagship brand is Stanbic Bank, saw its net profit increase by 15.15% to Shs411.53bn in 2023, up from Shs357.38bn recorded a year earlier. The profit was mainly driven by growth in loans and advances. With a market share of 29.28% under the profit category, Stanbic bank remains the most profitable bank in the country. Anne Juuko, the Stanbic bank Chief Executive, who delivered the impressive performance, has since been transferred to Kenya as Standard Bank Group’s Regional Head, Global Markets. She’s yet to be replaced substantively.
Centenary Bank, the indigenous Catholic founded institution, also retained its 2nd position.
Headed by Fabian Kasi as Managing Director, Centenary’s profit grew by 19.02% to Shs 297.08bn in 2023, up from Shs249.6bn recorded in 2022. The growth, according to the bank, was mainly boosted by interest on marketable securities besides fees and commissions as well as interest on loans and advances. Its market share under this category is 21.14%.
It’s followed by Absa Bank Uganda in 3rd position. Headed by Mumba Kalifungwa, Absa’s profit increased by 3.26% to Shs145.7bn in 2023, up from Shs141.1bn recorded a year earlier. Its market share under the profit category is 10.37%. The bank attributed its growth to a 42% growth in transactional banking and trading income.
Bank of Baroda is now the 4th most profitable bank in Uganda after its profit reduced by 4.76% to Shs116.36bn in 2023, down from 122.18bn posted a year earlier. Headed by Shashi Dhar as Managing Director, Bank of Baroda’s market share under this category is 8.28%.
Standard Chartered Bank aka StanChart saw its profit increase by 80.94% to Shs80.03bn in 2023, up from Shs44.23bn in 2022.
Sanjay Rughani, CEO of Standard Chartered Bank, attributed the bank’s robust growth to sustained income momentum across key business lines and significant reductions in credit impairments. The bank’s market share under the profit category is 5.69%.
Interestingly, the top five most profitable banks control a commanding 74.76% of the market under the profits category. This means the rest of the banks (20) share a paltry 25.24% of the market under the profits category.
GraphCitibank Uganda is the 6th most profitable bank in Uganda after its profit grew by 30.35% to Shs68.29bn in 2023, up from Shs52.39bn recorded a year earlier. Headed by Sarah Arapta as CEO, Citibank’s market share under this category is 4.86%.
It’s followed by Housing Finance Bank in 7th position. Its profit increase by 11.43% to Shs65.13bn in 2023, up from Shs58.45bn in 2023. Housing Finance Bank is another indigenous bank that is performing well. Its market share under this category is 4.63%.
Michael Mugabi, the Managing Director at Housing Finance, attributed the bank’s growth to digital transformation and revenue diversification efforts.
It’s followed by Diamond Trust Bank (DTB) in 8th position. The bank’s profit grew by 14.71 to 41.02bn in 2023, up from Shs35.76bn recorded a year earlier. Its market share under this category is 2.92%. DTBU recently appointed Godfrey Sebaana as its Chief Executive Officer and Managing Director. He replaced Varghese Thambi, who has driven the Bank’s transformation and growth since July 2007.
dfcu Bank that is headed by Charles M. Mudiwa as the Chief Executive Officer, saw its profit increase by 11.06% to Shs34.03bn in 2023, up from Shs30.64bn in 2022. This gives the bank a market share of 2.42% under this category.
The bank attributed its growth to impressive growth in customer numbers, transaction volumes, fees and commissions.
KCB Uganda completes the top 10 most profitable banks in Uganda. KCB, headed by Edgar Byamah as Managing Director, saw its profit decline by 8.3% to Shs30.15bn, down from Shs32.88bn in 2022. Its market share under this category is 2.15%.
A few banks continue to dominate the market on almost all key performance parameters. The top 10 most profitable banks control 91.74% of the industry market share under the profit category. This means 15 banks share a paltry 8.26% of the market under this category.
Check for more details about the most profitable banks in Uganda
Profits
Small banks surviving
Smaller banks are also making profits although many of them are struggling to meet Bank of Uganda’s new Shs150bn capital requirements.
Out of the 15 bottom banks, only PostBank, NCBA and Bank of Africa have a market share between 1% and 2% under the profits category.
PostBank, another indigenous bank owned by the Government, saw its profit increase by 81.6% to Shs27.53bn in 2023, up from Shs15.16bn in 2022.
Headed by Julius Kakeeto as CEO/MD, PostBank which became a fully fledged bank in December 2021, has a market share of 1.96% under the profits category. During the year under review, the bank launched the Wendi App that’s described as a game-changing innovation to drive financial inclusion growth. The bank also earned big from transactions related to the Parish Development Model.
NCBA that is headed by Mark Muyobo as CEO also consolidated its good performance. Its profit increased by 18% to Shs26.9bn in 2023, up from Shs22.79bn recorded a year earlier. This gives it a market share of 1.91% under the profits category.
Bank of Africa that is headed by Arthur Isiko as Managing Director has a market share of 1.82% under the profits category. This is after its profit reduced by 12.73% to Shs25.57bn in 2023, down from Shs29.3bn recorded a year earlier.
It’s important to note that two banks (United Bank for Africa and Cairo Bank Uganda) that recorded a loss in 2022 performed well in 2023.
UBA made a profit of Shs13.02bn in 2023 from a loss of Shs8.07bn recorded in 2022. UBA is headed by Chioma A. Mang as Managing Director and has a market share of 0.93% under the profits category.
Cairo Bank Uganda that is headed by Sylvia Jagwe Owachi as Ag. Managing Director, also recorded a profit of Shs1.69bn in 2023, up from a loss of Shs5.27bn in 2022. This gives it a market share of 0.12% under the profits category.
Other banks that made profit but with less than 1% market share under the profits category include; I&M Bank (Shs11.5bn), Bank of India (Shs8.08bn), Tropical Bank(Shs5.81bn), Exim Bank (Shs4.19bn), Finance Trust Bank (Shs3.73bn), Guaranty Trust Bank (Shs3.67bn), Opportunity Bank (Shs2.79bn) and Ecobank (Shs878m).
Loss-making banks
Equity Bank and ABC Capital Bank are the only banks that made a loss. Equity that has been plagued with fraud scandals lately made a shock loss of Shs18.77bn. A year earlier, Equity Bank Uganda that is headed by Anthony Kituuka as Managing Director, had recorded a net profit of Shs45.75bn, down from Shs86 billion in 2021. Kituuka was appointed to this position in November 2022 after Samuel Kirubi, the then Managing Director, was promoted to the position of Group Chief Operating Officer at the Equity Group Holdings Plc.
Besides the scandals, Equity has been battling huge Non-Performing Loans (NPLs) and bad debts written off for a long time.
Business Focus analysis shows that Equity has one of the highest NPLs in the market as of 31st December 2023. Equity Bank’s NPLs increased to Shs363.97bn in 2023, up from Shs277.75bn in 2022. Its NPL ratio is 22.7%, the second highest in the market. NPL ratio is considered low when it’s below 5%. Additionally, Equity’s bad debts written off increased to Shs60.7bn in 2023, up from Shs34.79bn in 2023.
Explaining the loss, the bank said: “Net loans reduced by 1%. Prudent provisioning around key names, coupled with the full
recognition of the provision and loss impact of the digital loans fraud, however, resulted into the reporting of a net loss position for the year.”
In March this year, five Equity Bank staff members were remanded to Luzira prison on charges of conspiracy to defraud the bank of Shs 62 billion through unsecured loans.
The suspects, Julius Musiime (Head of Agency Banking), Erina Nabisubi (Relationship Manager Telecom), Fred Semwogerere (Banker), Cresent Tumuhimbise Tibarwesereka (Relationship Officer), and Wycliff Asiimwe (Distribution and Marketing Consultant), are accused of being part of a scheme involving unauthorized debits and money laundering.
The prosecution alleges that between 2021 and 2024, the group obtained fraudulent loans by presenting unqualified individuals as legitimate borrowers. They are further accused of aiding in the concealment of the stolen funds.
ABC Capital Bank Ltd that is headed by Jesse Timbwa as CEO, made a loss of Shs515m from a profit of Shs803m recorded in 2022.The bank’s customer deposits reduced to Shs24.96bn in 2023, down from Shs27.36bn in 2022, while its assets reduced to Shs59.1bn from Shs62.14bn in 2022.
Considering its size, bad debts written off increased to Shs2.8bn in 2023, up from Shs205.1m, while NPLs reduced slightly to Shs1.14bn from Shs1.8bn in 2022.
2024 Outlook
Most bank CEOs are optimistic about 2024 despite the downside risks to economic growth that remain.
dfcu bank’s Mudiwa says the company will continue to leverage its rich heritage to deliver its purpose of “Transforming Lives and Businesses in Uganda,” while delivering value to its shareholders and stakeholders.
“We are committed to building on our strong foundation and delivering even greater value through future ready innovations in our products and services, a focus on enhancing customer experience and a dedication to winning market share,” Mudiwa says, adding: “We strive to exceed expectations and remain a trusted partner for all your banking needs.”
Looking ahead, Housing Finance Bank says it aims to continue fulfilling its mandate of providing accessible and affordable housing finance solutions for Ugandans, aligned with its strategic plan, through collaborations and partnerships across both public and private sectors within the housing value chain, as well as in other pivotal sectors such as manufacturing, agriculture, education, health, trade, and tourism, in line with its aspirations of contributing to Uganda’s socioeconomic transformation.
Equity Bank says in 2024 it aims to enhance economic and social inclusion by empowering productive households and facilitating financially robust value chains.
“We have set a clear target: we seek to amplify the impact of borrowing for businesses and consumers alike. By facilitating access to credit, we aim to catalyse value chain expansion and job creation for businesses while simultaneously enabling households to pursue their aspirations and improve their livelihood through consumer borrowing,” the bank said in a statement.
Check for more details about the most profitable banks in Uganda
Profits
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