2017 was generally a challenging year for Uganda’s banking sector, but it was more challenging for Standard Chartered Bank (StanChart).
According to the bank’s 2017 financial results released on Friday, StanChart net profit dropped by 16.9% to Shs93.19bn in 2017, down from Shs112.15bn recorded in 2016.
Most of the bank’s key performance parameters nosedived, explaining why the bank’s profits reduced.
StanChart’s total income fell to Shs395.67bn in 2017, down from Shs481.97bn in 2016.
Customer deposits also reduced slightly to Shs1.9 trillion in 2017, down from Shs1.98 trillion in 2016, while loans advanced to customers reduced to Shs1.22 trillion from Shs1.23 trillion in 2016.
Total assets also reduced to Shs2.8 trillion in 2017, down from Shs2.94 trillion in 2016.
The bank’s core capital reduced to Shs362.3bn, down from 391.3bn in 2016.
StanChart has been cautious towards lending in recent years due to unprecedented high levels of Non-Performing Loans (NPLs).
In 2017, StanChart’s NPLs remained high at Shs78.6bn, down from Shs112.1bn, representing a reduction of 29.8%.
This is a positive trend if the bank continues to manage NPLs well.
However, bad loans written off increased to Shs17bn in 2017, up from Shs14bn.
It should be noted that in early 2017, Standard Chartered Bank Group reshuffled its top management, sending Herman Kasekende, the pioneer Ugandan to head Standard Charted Bank Uganda in 100 years to Standard Chartered Bank Zambia as CEO and Managing Director, ending his four and half year tenure at the helm of Uganda’s second largest bank by assets then.
Kasekende was inherited by Albert Saltson, a Ghanaian national, who was the CEO at Standard Chartered Bank Zambia.
His main task was to turnaround the bank by reducing the huge NPLs left behind by his predecessor. NPLs have increased mainly as a result of high interest rates and the sluggish economy that has seen the bank’s big borrower’s default on their loans.
Some of the bank’s big customers have become finically distressed while others have been declared bankrupt.