Starting off with a handful of customers seeking to purchase houses for their homes in 1967, Housing Finance Bank (HFB) has since grown to touch and change lives in thousands of homes in Uganda.
In 2008, HFB diversified from a specialist mortgage lender to include traditional banking and even changed names from Housing Finance Company to Housing Finance Bank- heralding a decade of steady growth.
As per the just-released 2019 results, the bank’s assets have over the last 10 years grown at a compounded annual growth rate (CAGR) of 10 per cent, from UGX360.1 billion in 2010 to UGX912 billion- a growth of 154.3% per cent or UGX552.4 billion!
But perhaps, more interestingly, 25 per cent of this UGX552.4 billion- UGX135.6billion, was added in just one year- 2019!
Compared to the last ten years, 2019 was quite phenomenal.
In 2019 alone, assets grew by 17.5 per cent from UGX776.9 billion to UGX912.5 billion, compared to the 10-year 10 per cent CAGR.
This was on account of a 24 per cent growth in deposits, from UGX451.3 billion in 2018 to UGX559.8 billion in 2019, versus a 10-year 13 per cent CAGR. Lending also grew by 8.2 per cent from UGX511.6 billion in 2018 to UGX553.5 billion in 2019.
As a result, profit growth that in 2018 slowed down, has also picked up, albeit moderately; growing by 7.6 per cent in 2019, from UGX20.9 billion in 2018 to UGX22.5 billion in 2019. In 2018, profitability grew 4.5 per cent from UGX20 billion to UGX20.9 billion.
Commenting about the results, Michael Mugabi, the bank’s Managing Director attributed the 2019 performance to “an enhanced customer experience that has been specifically designed to meet the changing needs of customers at every stage of life.”
“Over 2019, we expanded our reach with improved offerings across key channels including mobile banking, retail internet banking, Internet banking, MasterCard, agent banking, and a 24/7 customer contact center,” he said, adding: “Housing Finance Bank is committed to offering the best customer experience across all our service points.”
“I would like to thank the Board of Directors, management, our customers, staff and stakeholders for all support rendered over the years,” he said, in a commentary accompanying the results published today.
Solid and experienced homegrown leadership
2019 is the first full year for Michael K Mugabi and Peace Kabunga, since they were appointed Managing Director and Executive Director, respectively, in November 2018.
An accomplished banker, with over 20 years’ experience, before he was appointed Managing Director, Mr Mugabi, served as the bank’s Executive Director since 2012. In his role as Executive Director, he oversaw critical functions of the bank including credit, information technology, and bank operations- the bank’s bread and butter. In that role, he was instrumental in fully transiting the bank from a specialist mortgage banking institution into a fully-fledged commercial banking entity. Before becoming Executive Director, Mugabi also served in other key senior positions, such as operations, legal, and human resources management.
Mugabi holds a Masters Degree in Commercial and Corporate Law from the University of London (UK) and a Bachelor of Laws Degree from Makerere University Kampala, amongst other professional qualifications.
Peace Kabunga is a consummate banker herself, with over 15 years’ experience, as an expert in mortgage, personal and business banking.
The Bank also boasts of a strong and experienced management team of senior banking executives, with strong local knowledge, that facilitates the overall operations of staff among others.
Tight Rules, Big Money: Energy Ministry Restricts Gold Trade to Licensed Operators as Central Bank Enters a UGX 20 Trillion Market The bank’s performance is also underpinned by a solid board, led by Mr. David G. Opiokello, since November 2016. But before ascending to the helm, he had been serving on the board as a Non-Executive Director. Mr. Opiokello previously held the position of Ag. Deputy Governor, Bank of Uganda, where he worked for 28 years in various capacities, before his retirement.
This solid board and management, have been central to the bank’s full transition from a specialist mortgage lender in 2008, into one of the country’s top 10 all-around lenders- with over 50% market share in mortgage lending alone.
Although the entire banking industry is yet to release their results, as at 31st December 2018, HFB was Uganda’s 11th largest bank by assets (UGX777 billion; 2.8 per cent market share) and 9th largest by lending (UGX511.6 billion; 4 per cent market share).
Leveraging strong customer focus and strategic partnerships
Commenting further about the results, Mr. Mugabi says that the bank, which is the market leader in mortgage lending, had in 2019 dedicated their focus on “creating superior customer experiences and solid strategic partnerships”; all driven by “a strong passion for supporting Uganda’s economic and social development.”
He also said that the bank’s product development team had “designed and redesigned” their mortgaging offering, creating “several solutions for affordable housing.”
“Prospective home-owners now have an opportunity to build incrementally with tailor-made housing loans offered by Housing Finance Bank,” he said, adding: “We continue to reach out to more customers with focused value propositions in all life aspects including housing, business, education and infrastructural developments, as the bank of choice, supporting individuals and businesses, to build and sustain their respective ventures for the growth of our country.”
Mugabi said that to consolidate the bank’s “path to progress”, the bank in 2019 had built and maintained “strong relationships with key development partners locally and internationally.”
“We have further initiated and sustained relationships with developers, landowners, real estate agencies, business associations, investment clubs, and other stakeholders. We continuously engage through forums like “The Housing Baraza” under the theme “Housing for Wealth Generation”, The Uganda Housing Conference, African Union For Housing Finance and other avenues with a unified objective of improving livelihood and enhancing business growth in our country,” he said.
HFB cautious but optimistic about post-Covid-19 future
Mugabi, says that the bank is “cognizant of the current challenges presented by the COVID-19 pandemic and its impact on all Ugandans,” but remains “committed to the delivery of practical solutions and interventions that will support our customers during this time and the years ahead.”
The bank has already rolled out its credit restructuring exercise to its customers who anticipate some challenges in servicing their credit obligations so as to “find mutual solutions that will minimize the potential impact of coronavirus on our community of customers.”
The specific period and nature of the restructuring will be customized to the unique borrower needs, but within the wider 12 months stipulated by BOU.
He also added that the bank’s relationship managers were also working with various employers to agree on applicable assistance programmes for salaried borrowers.
“We welcome all our customers who anticipate difficulties as a result of this global pandemic to approach us through our Branch Managers and Relationship Managers for discussion on possible restructures of existing loans,” he said adding that the bank was also open to new lending proposals.
“In the same breath, those that have identified potential business opportunities during this time are welcome to approach us for financing. We will continue to reach out to more customers with more focused value propositions in all life aspects including housing, business, education and infrastructural developments, as the bank of choice, supporting individuals and businesses, to build and sustain their respective ventures for the growth of our country,” he says of the future.
