Stanbic Bank Uganda continues to make more profits.

SBU’s 2023 annual results; show:

  1. Profit after tax increased from UShs 357 billion in 2022 to UShs 412 billion in 2023, indicating a 15.2% year-on-year growth.
  2. Total revenue grew by 15.1% from UShs 1.04 trillion in 2022 to UShs 1.19 trillion in 2023.
  3. Customer deposits and net loans & advances have also increased, indicating trust and growth in lending activity.
  4. There is an improvement in Return on Equity, which increased by 90 basis points from the previous year.

The detailed results have not yet been officially released. Our preliminary review of the highlights shows:

The growth rates of customer deposits and total assets are relatively modest at 3.3% and 2.7%, respectively, which suggests a need to enhance deposit mobilization and asset growth strategies to match the higher growth in profitability.

While the bank shows a positive growth trajectory, we are yet to compare these figures against the industry averages, which will happen after all the banks publish their annual reports. We will analyze the bank’s performance against the top 10 peers.  In our summitBI Uganda’s State of Banking Report 2023 we will give a deeper overview of the bank’s historical growth rates compared to the industry average.

SBUL’s investment in digital banking platforms represents a strategic pivot towards meeting the evolving needs of the modern consumer. Everyone is doing this. We continue to analyse how Stanbic Bank creates unique winning levers through digital. The emphasis on digital innovation helps reduce transaction costs, improve service delivery efficiency, and expand the customer base through inclusive financial products. However, our study of the market shows that many banks automating are still “manual digital banks” whereby they continue to be manual at the core, which affects scalability.

SBUL’s customer-centric approach, offering tailored financial solutions, enhances customer loyalty and market share growth.  Stanbic’s diversified portfolio, spanning retail, corporate, and investment banking, mitigates risks and leverages multiple revenue streams. As a primary dealer in government securities, SBUL enjoys a strategic advantage, allowing for stable income generation and reinforcing its market position. In Arua, and other upcountry locations, for example, Stanbic is a banker of many other small banks and microfinance Institutions which gives it a unique advantage as it makes profits from other banks!

Digitalization has enabled SBUL to optimize its cost structure by automating operations and reducing dependency on physical branches. What we are noticing is that Stanbic is operating a hub and spoke sort of model – when it comes to branch operations. Only strategic branches are being operated, which feeds the bank’s expanding agency network.  Taken together, these are helping to lower overall costs and this explains the y-o-y increase in profitability. We also see ongoing investments in technology and cybersecurity necessary to maintain and enhance this cost efficiency.

SBUL’s role as a primary dealer in government securities and its ability to mobilize deposits from government accounts provide a liquidity advantage. This access ensures a stable deposit base, lower cost of funds, and the ability to offer competitive interest rates to customers. It also positions SBUL favourably in terms of liquidity management and investment capabilities.

Copyright Mr Strategy, 2024.

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