THE INDEPENDENT | Stanbic Bank Uganda (SBU) paid out a total of Sh110 billion to its shareholders for the 2019 financial year, continuing a long success story of consistently achieving positive results despite the prevailing challenges.
At the height of the Covid-19 pandemic last year, the Bank of Uganda (BoU) ordered regulated financial institutions to postpone all discretionary payments, including dividends, until they can demonstrate a solid financial base.
After BoU confirmed that the bank was adequately capitalized, it gave the bank the green light to pay dividends for 2019. On December 29, 2020, the board of directors of Stanbic Uganda Holdings Limited, the parent company of Stanbic Bank Uganda Limited, approved a final Dividend distribution of UGX 2.15 per share.
Speaking to the media at the Kampala Serena Hotel, Anne Juuko, the CEO of Stanbic Bank Uganda, said that despite a very difficult season, the bank has been able to fight its way through and make sure it keeps its promise to pay its shareholders to keep them consistent to get paid a return on their investment.
She said, “In 2018, our shareholders received UGX 97.5 billion in dividends. Despite the slowdown in business, rising trade deficits and increased bad loans, we decided to increase the dividend payout by 13% to restore the trust of our shareholders. “
“The forecasts of the Bank of Uganda show that the economy will grow by three to 3.5 percent in 2021 and by 6 to 10 percent by 2023. This will be a direct result of the introduction of Covid-19 vaccines; Implementation of the African Continental Free Trade Agreement (AfCTFA); an expected recovery in tourism; Improvement in global investment and the continued recovery in exports due to revitalized foreign demand, ”said Juuko.
As a precaution, however, it should be noted that the economies that are dependent on the commodity and tourism sectors will remain vulnerable for the next 12 to 18 months. Uganda also has the highest number of active Covid-19 cases in the region and a second wave outbreak cannot be ruled out.
The BoU’s central bank rate remained pegged at 7% for the ninth straight month through February 2021, and that trend is set to continue in 2021. As a result, commercial banks’ lending rates have also fallen from 13.8% in January 2021 to 12.3% in 2021. In February, Stanbic lowered its average key interest rate from 18% to 16.6% (1.4%), which means that customers who Borrow in local currency, at least 26 billion by the end of December 2019 ”
Inflation peaked at 4.7% in July 2020, but fell to 3.6% at the end of the year. It is expected to stay within the central bank’s median target of 5% all year round while the Ugandan shilling is forecast to be 3,750-70 for ’21 from its current 3,660 / 70. will amount
Samuel Mwogeza, SBU’s Chief Financial Officer, said: “Uganda’s private sector credit is expected to grow rapidly. The Stanbic Purchase Manager Index (PMI) fell to record lows in April 2020, but gained momentum again in the second half of the year. It hit range 50 again in February 2021 when employment increased for the first time in three months following the elections and a wider school reopening. Optimism has returned and business activity is picking up again. This ended a two-month series of downsizing and a subsequent increase in staff and employment levels. “
He said the agriculture, manufacturing, utilities and transportation sectors saw growth, signaling the appetite of commercial banks to provide financial assistance. However, the trading sector has been affected by disruptions in access to working capital and bottlenecks in import and export processes. Small and medium-sized enterprises (SMEs) were hardest hit by the pandemic, leading to a decline in business activity and an increased need for credit restructuring.
BoU encouraged commercial banks to restructure credit facilities for their clients and forego credit restrictions in order to minimize the likelihood of previously solid companies going bankrupt. Uganda’s financial regulator has also decided to moderate the credit relief so banks can adjust the non-performing loan criteria.
Mwogeza said government interventions in target sectors such as tourism and education are likely to capitalize on economic growth and provide significant resources to support SMEs. The government has already increased business development support in the form of funding, training and other capacity building for SMEs to help them withstand the current tremors.
Uganda’s financial markets remain one of the most popular destinations for portfolio investors. With an improvement in tax administration, it will attract significantly more inflows. This would ultimately lead to lower borrowing costs for the state.