Banks have in the last two months been releasing their financial results for the year ending December 31, 2017.
The results obtained and analysed by Business Focus indicate that the banking sector is yet to fully recover from the 2011 crisis that saw inflation cross the 30% mark, a thing that forced banks to increase interest rates to as high as 30%.
Coupled with a sluggish economy, many borrowers defaulted on their loans, leading to increased industry Non-Performing Loans (NPLs) and losses.
The 2017 results show that industry NPLs remain high. However, industry profits continue to increase as losses decline, pointing to steady recovery.
It is worth noting that there are 24 operating banks in Uganda.
In 2017, industry profits increased to Shs768.6bn, up from Shs676.56bn in 2016. On the other hand, loss making banks increased to six in 2017, up from four recorded in 2016, but total industry loss reduced to Shs16.053bn, down from an industry loss of Shs26.528bn recorded by the four banks in 2016.
The loss making banks as of December 31, 2017 include Guaranty Trust Bank, Exim Bank, Commercial Bank of Africa, Tropical Bank, Cairo International Bank and ABC Capital.
Exim Bank that acquired Imperial Bank a few years ago leads the pack, having recorded a net loss of Shs5.98bn in 2017, up from 4.1bn loss recorded in 2016.
The bank hasn’t been performing well since it joined the Ugandan market in 2011. The rise in losses could be attributed to the bad loans written off that increased to Shs14.69bn in 2017, up from Shs1.4bn recorded a year earlier. The bank that is managed by Sabhapathy Krishnan as CEO saw its NPLs reduce to Shs12.13bn in 2017 from Shs22.3bn in 2016.
It is followed by Tropical Bank that made a loss of Shs5.5bn in 2017, down from a loss Shs13.4bn.
According to a critical analysis of the figures, Tropical’s loss can be attributed to high NPLs and bad loans written off. NPLs reduced to Shs28.7bn in 2017 from Shs38.27bn in 2016, while bad loans written off increased to Shs12.06bn in 2017 from Shs11.79bn in 2016.
Krekshi Sameh Mahmud, the Managing Director of the bank has huge task to turnaround the bank that has been performing poorly for many years.
Guaranty Trust Bank (GTBank) scoops the 3rd position in as far as banks in the red are concerned. The bank made a loss of Shs1.9bn in 2017, up from Shs1.43bn loss in 2016. The loss could be attributed to high NPLs, hitting Shs4bn in 2017, up from Shs2.85bn in 2016.
The bank recently appointed Lekan Sanusi as its Managing Director, replacing Olufemi Omotoso, who returned to the Group’s head offices in Nigeria. It should be noted that GTBank entered the East African market in 2014 after acquiring 70 percent in Fina Bank Group’s operations in Kenya, Uganda and Rwanda.
Commercial Bank of Africa (CBA) has also found it hard to hit the ground running after re-joining the Ugandan market in 2014 (It had exited the market in 1969 due to political instability). The bank has been recording losses since inception. In 2017, it made a loss of Shs1.3bn, down from Shs8.1bn loss in 2016. Like other loss making banks, CBA’s loss is certainly due to NPLs that increased to Shs7.8bn from Shs6.19bn in 2016.
However, other key performance parameters are positive for CBA that is headed by Samuel Odeke as Managing Director.
Troubled Cairo International Bank (CBA) that had made a net profit of Shs1.4bn in 2016 bounced back in the red chart, registering a loss of Shs1.14bn in 2017. The loss is attributed to high NPLs and bad loans written off; NPLs increased to Shs2.5bn from Shs1.67bn, while bad loans written off increased to Shs450.5m in 2017, from Shs235.7m in 2016.
ABC Capital completes the table of the loss making banks, having recorded Shs533m loss in 2017, from Shs815m net profit registered in 2016.
Keep glued to this site for our detailed story on the best and worst performing banks in Uganda.