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Absa Bank Uganda Registers Shs41bn Profit Despite Tough COVID-19 Economic Impact

Mumba Kalifungwa, Absa Uganda’s Managing Director and Michael Segwaya, the bank’s Chief Finance Officer and Executive Director during the release of the bank’s 2020 financial results.

 Absa Bank Uganda has released financial results for the year ending December 2020 reporting profits after tax of UGX 41 billion and growth in revenue of UGX316 billion.

Speaking during a media briefing, the bank’s Managing Director, Mumba Kalifungwa said “Despite a tough year owing to the economic impact of the COVID-19 pandemic, the bank achieved total revenue of Ushs 316 billion and Profit After Tax of Ushs 41 billion.”

The bank witnessed an 8.1% growth in customer deposits amounting to UGX2.4 trillion, maintaining a 12% compounded annual growth rate for the third year running.

“Despite the industry decline in lending, our gross loan book grew to UGX1.5 trillion maintaining a three-year compounded annual growth rate of 9.6%, mainly driven by our commitment to support our customers credit needs. We remain committed to providing financing to the economy to facilitate trade, commerce and capital formulation for business growth,” Mr. Kalifungwa stated.

Costs remained well controlled with a 4.9% growth year-on-year, in line with core inflation for the year ended December 2020. This was on the back of better cost management and continued investment in technology platforms to increase efficiencies.

“The COVID-19 pandemic necessitated an accelerated investment in digital platforms to ensure business continuity in light of the measures that were introduced to curb the spread of the pandemic. We have prioritized investment in innovation as we seek to leverage the strength of digital technology to create seamless experiences for our customers and consequently, realize our ambition to become a digitally led bank,” he added.

With a capital ratio of 23.9%, the bank remains well capitalized way above the regulatory requirement of 12%. The bank has however registered an increase in credit loss ratio to 3.7% from 0.9% in 2019.

“The pandemic impacted our customers’ ability to meet their credit obligations making it necessary for us to increase our impairment provisions. In line with the Bank of Uganda COVID relief measures, we provided credit relief support to 1,437 customers in economic distress to help them navigate the challenges brought on by the pandemic,” Mr. Kalifungwa added.

Looking to the future, Mr. Kalifungwa remained optimistic about the strides being made towards economic recovery.

“I would like to commend the Ministry of Health on its efforts to combat the pandemic. With increased access to the vaccine both locally and globally, we anticipate a pick-up in key sectors including international trade, Agriculture, Construction, Manufacturing and Services sectors. We intend to invest in sectors crucial to socio-economic development and economic recovery by growing private sector credit. The economy has shown resilience and I am optimistic it will recover from the contraction we witnessed last year,” Mr. Kalifungwa concluded.

Taddewo William Senyonyi
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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