Kampala. Commercial banks in Uganda have started picking up steam with the economy, posting strong profits last year.
Kenya Commercial Bank (KCB) and Dfcu, the two institutions which have so far released the audited financial statements for 2013, indicate strong financial performance, mainly driven by growth in loans to customers and a surge in foreign exchange income.KCB’s audited financial results published yesterday indicate that the institution’s net profit grew sixfold to Shs6.7 billion, up from Shs1.1 billion recorded for the same period the previous year.
KCB managing director Albert Odongo attributed the surge in the institution’s profit to growth in the loan book, which increased from Shs162 billion to Shs187 billion last year, resulting in an increase in interest income from Shs17.7 billion to Shs24.4 billion.KCB’s forex income on the other hand grew to Shs9.3 billion from Shs6.4 billion due to an increase in currency trade volume among Uganda, Kenya and South Sudan.Dfcu Bank also recorded strong growth in its net profit, increasing to Shs34.8 billion last year up from Shs29.8 billion in 2012.
The institution’s loans and aances to customers increased to Shs623.1 billion up from Shs554.5 billion while its foreign exchange income grew to Shs7.7 billion from Shs5.6 billion during the period.The good performance will see Dfcu shareholders get Shs17.84 per share held in the institution following a recommendation from the board of directors.Customer deposits also recovered strongly for the two banks, according to the released financial statements.
Losses on loans and bad debtsDespite recovery in loans aanced to customers, the banks’ net impairment loss on loans and aances increased to Shs5.2 billion up from Shs2.7 billion for KCB and Shs13.4 billion up from Shs11.3 billion for Dfcu.
Going by the figures, growth in bad loans could be an indication that the banking industry is still faced with a high rate of bad loans, resulting from a hike in lending rates.
Dfcu wrote off Shs15.6 billion in bad debts last year compared to Shs8.7 billion in 2012 while KCB wrote off Shs3.2 million compared to Shs2.1 million the year before.
Numbers34.8bThe amount of net profits in Shillings Dfcu recorded for 2013, up from Shs29.8 billion in 2012.
6.7bThe amount of net profits in Shillings KCB recorded for 2013, up from Shs1.1 billion in 2012.
SOURCE: DAILY MONITOR