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Housing Finance Bank in 2023 became the fastest-growing bank by customer deposits, beating off all its rivals in the top 10 banks segment, including all 6 Domestic Systemically Important Banks (DSIBs), which control about 65% of the industry.
According to results announced today, Housing Finance Bank reported that customer deposits grew by 44%, from UGX1.119 trillion to UGX1.611 trillion in 2023, a growth of UGX492.5 billion.
According to industry results that we have seen, the other two banks that grew their deposits in 2023 nearly as much were Absa Bank Uganda (UGX400.3 billion) and DTB Uganda (UGX331.1 billion).
Leveraging the outstanding growth in deposits, the bank also grew its lending by 28%, from UGX778 billion to UGX996 billion. Growth in lending led to a rise in interest income that in turn boosted a 27.7% growth in total income, from UGX258.1 billion to UGX329.8 billion.
Subsequently, the bank announced a profit after tax of UGX 65.1 billion, an 11.3% increase from the UGX 58.5 billion announced in 2022.
In an interview with CEO East Africa Magazine, Michael K. Mugabi, the bank’s Managing Director attributed the growth to “driving sustainability and financial inclusion as a strategy that saw us venture into new territories for the Bank such as youth, women in business and micro-finance that resulted into new to bank customer and deposit growth”.
“We also partnered with the Government in promoting economic growth through financial empowerment with programs like PDM that also saw us grow on the deposits front,” he further explained, adding: “Our partnerships particularly leveraging on technology opened new channels as well as increased our digital footprint bringing even more of our services closer to our customers”.
Mugabi also said that the bank, enhanced its customer value proposition, through affordable solutions as well as understanding our customer’s needs, which enabled the bank to “increase our customer base as well as a share of wallet and deposits”.
David. G. Opiokello, Chairperson of the Board of Directors at Housing Finance Bank, implied that the commendable results were driven by the prudent implementation of the initial phase of the Bank’s 2023 – 2027 strategic plan.
“Despite operating in a challenging economic environment driven by relatively high inflation, we achieved resilient growth across all key financial metrics which resulted in our largest net profit to date and a 19.4% return on equity that attests to our efficient utilisation of shareholder capital to generate favourable returns,” he said.
He added that this growth was complemented by significant investments in the Bank’s risk management and cybersecurity framework to safeguard customer deposits and transactions and an expansion into microfinance and digital lending avenues to diversify the Bank’s revenue streams that resulted in a 27.7% growth in total income to UGX 329 billion.
He also said that the bank had in the year increased its core capital to over UGX273.8 billion over and above the Bank of Uganda’s UGX150 billion minimum capital requirements.
Sustainable banking and financial inclusion
Micheal Mugabi further said that the continued solid performance underscored the bank’s commitment to expanding its customer base and enabling sustainable home ownership and financial independence.
He also reiterated the importance of the bank’s digitalisation agenda that further improved customer experience.
“We remain committed to leveraging digital technology, from upgrading our core banking system to transitioning from traditional to recycler ATMs, with the overall goal of ensuring seamless transactions, enhancing customer convenience and reducing the cost of transacting which paves the way for deepening financial inclusion,” he said.
In addition to its stellar financial performance, Housing Finance Bank remains focused on integrating social, economic and environmental considerations into its business operations and practices upon receiving a certificate of acceptance to the Sustainability Standards and Certification Initiative (SSCI) during the 10th Global Sustainable Finance Conference held in Karlsruhe, Germany in August 2023.
Throughout 2023, Housing Finance Bank intensified its impact initiatives in education, innovation, and housing through strategic partnerships with organisations such as the National Social Security Fund, StartHub Africa, Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ), Habitat for Humanity, and the Buganda Kingdom that reflect the Bank’s dedication to community development.
Micheal Mugabi emphasized the Bank’s continued pursuit of a sustainability strategy with a focus on climate change and inclusive lending.
“This strategy will translate into initiatives such as climate action and the development of inclusive lending solutions. By prioritizing these values, we believe we can ensure sustainable economic growth as well as create a lasting impact on housing access, SME financing, and the overall well-being of the communities in which we operate,” he said.
The Bank also received several recognitions during the financial year under review such as the Gold Award under the United Nations Development Programme (UNDP) Gender Equality Seal (GES) Programme for Private Enterprises in recognition of its commitment to advancing gender equality and empowering women through internal measures. Additionally, the Bank received the Mortgage Banker of the Year Award at the 2023 Real Estate Awards organized by the Association of Real Estate Agents Uganda for its work in advancing access to mortgage financing to Ugandans.
Looking ahead, Mugabi said, the bank will 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.