BY STEVEN BARYEVUGA
Last year was a good year for the banks. The year 2016 saw banks registering huge profits, having decided to concentrate their efforts on recovering Non-Performing Loans (NPLs) while remaining cautious towards lending.
This drive saw total industry profit increase from Shs676.73 billion in 2016, up from Shs489.64 billion recorded in 2015. However, despite the double digit growth, the industry recorded high impairment levels of 10.5%.
Worse still, the non-performing loans also increased sharply, sending chilly signals to lending options for most banks which, in turn, slowed down major sectors of the economy like agriculture and services.
Lending on the down-down
This could be the reason projected growth levels slowed down in 2017. Statistics indicate that banking sector profitability dropped 4% Year on Year as at June 2017 compared to 18% growth same time last year.
Stanbic Bank, the most profitable commercial bank in recent years, recorded Shs95.4 billion net profit in half year results for 2017, down from Shs107.2 billion recorded in the year ended June 2016. This is a whole 11% decline in profitability.
Releasing the results on August 15 at Serena Hotel, Kampala, Patrick Mweheire , the Stanbic Bank Uganda chief executive, attributed the bank’s faltering performance to the continued drop in interest rates, as well as slower-than-expected credit uptake.
“Low credit uptake plus slow economic activity and the flat currency all led to a drop in the profit after tax,