The Ugandan subsidiary of Nigeria’s United Bank for Africa on April 08th announced a UGX4.9 billion profit (USD1.3 million) profit, confirming that the lender is firmly out of its eight-year loss-making dry spell.
In results published in New Vision, a leading local daily, the bank announced that profit had climbed 390% from UGX1 billion in 2017 to UGX4.9 billion in 2018. This is the third year of straight profitability, following a UGX2.6 billion profit in 2016.
The good 2018 performance was powered by a 43% rise in income from UGX33.3 billion in 2017 to UGX47.6 billion in 2018. The income growth was largely driven by significant government lending. During the period under review, the bank’s interest earnings on government paper grew by 45% from UGX 12.1 billion to UGX17.5 billion.
Customer lending grew by 20%, from UGX27billion to UGX33 billion, while customer deposits nearly doubled from UGX127.8 billion to UGX244.7 billion- a 91.5% growth.
Total bank assets grew by 46.7% from UGX216.2 billion to UGX317.1 billion.
Johnson Agoreyo the turnaround CEO
UBA Bank’s three years of straight profit firmly put the bank out of its 8 years of back-to-back losses that today, leave the bank with UGX48.7 billion in accumulated losses.
Much of the profitability has been driven by the arrival, in June 2016 of Johnson Agoreyo, the bank’s 6th Managing Director/Chief Executive Officer.
Agoreyo whose over 25 financial services experience spans across key African banking brands, namely: Zenith Bank, Stanbic IBTC and First Bank of Nigeria from where he joined UBA in 2014. His last assignment before coming to Uganda was Group General Manager (Lagos Island, Central & Upper West).
Over the last 2 years, Agoreyo whose core expertise is in corporate and investment banking, has led a series of technologically driven innovations- many of them industry firsts.
For example in March 2017, UBA Bank and Uganda Revenue Authority (URA) launched a VISA and MasterCard powered tax payment solution that lets anyone with any of VISA or MasterCard branded cards pay tax using UBA Bank platforms or online regardless of which bank they bank with.
In September 2018, UBA together with MTN Uganda and MasterCard launched the MTN MoMocard, a debit card-like payment solution that allows MTN mobile money customers make quicker, safer and more convenient online payments globally, eliminating the need to have bank accounts before making online purchases.
MTN has the lion’s share of Uganda mobile payments sub-sector that as of June 2018 pushed UGX 19.3 trillion (USD5.2 billion) according to Uganda Communications Commission (UCC). MTN Group reported that MTN Uganda in 2019 earned ZAR 2.3 billion (UGX608 billion) in mobile payments related products.
UBA in 2018 won the Digital Impact Awards Africa (DIAA) Social Banking award for its groundbreaking innovation -LEO Chat banking, the industry’s first banking chatbot that supports customers perform ordinary banking transactions such as account opening, funds transfer and airtime purchases while providing access to customer service support on social media sites such as Facebook and WhatsApp.
All the above innovations have partly boosted UBA’s fees and commission business line which forms nearly 30% in the last 2 years of the bank’s earnings- UGX11.1 billion in 2017 and UGX10.6 billion in 2018.
The innovations have not only boosted direct incomes, but have also endeared the bank to customers, impacting on other fundamentals such as customer deposits.
During Agoreyo’s 3 years at the bank, customer deposits have grown by 183.1% from UGX86.4 billion in 2016 to UGX244.6 billion in 2018. This translates into a compound annual growth rate (CAGR) of 41.5%.
Lending has grown by 87.5% from UGX 17.6billion to UGX33billion (CAGR 23.3%).
This growth in the bank’s fundamentals, fuelled a 43% growth in income from UGX33.3 billion in 2016 to UGX47.6 billion in 2018 (CAGR 12.5%). Net Profit has grown by 88.5% from UGX2.6 billion to UGX4.9 billion. Assets have grown by 83.3% from UGX173 billion to UGX317 billion (CAGR 22.4%).