Stanbic Bank profits dip 4%

Stanbic Bank profits dip 4%
Monday, 30th August, 2010
By sylvia juuko Stanbic Bank registered a 4% drop in net profit to sh44.7b in the first-half of this year compared to sh46.8b in June 2009, the latest unaudited financial statement has shown. The decline was attributed to lower interest income. “The substantial decrease in yields on Treasury Bills (TBs) had a negative impact on interest income. “This has impacted, not just Stanbic Bank, but the whole industry because a lot of our lending is predicated upon the inflation and TBs rate,” said Phillip Odera, the managing director. Despite the reduction in profitability, he said, the balance sheet had grown by 39%, the strongest growth in three years. “We have had a substantial improvement in the balance sheet, with loans and advances to customers growing by 31% to sh1.03 trillion in the first-half of the year compared to sh786.7b in the same period last year,” he said while unveiling results to investors at the Kampala Serena Hotel on Thursday. Customer deposits surged by 45% to sh1.8 trillion in the first-half of the year, from sh1.2 trillion in the same period last year. Odera explained that because the banking industry was paying highly to get deposits, Stanbic has changed strategy to focus on customer delivery. “If you compete on a price level, you are reduced to a commodity. Once you are that, you are up for the highest bidder. Our strategy is to stay away from that, and this accounted for 45% increase in customer deposits,” Odera explained. He said operational costs went up because the bank was investing in extending its footprint and delivery channels across the country. The bank also plans to open an additional 22 branches. Odera’s outlook for the second-half of the year was bullish. “The outlook is positive. We believe we are on the right track. We have been able to identify some alternatives revenue streams, which will come to fruition this year. That will translate into better 2010 numbers,” he said. The board has not recommended a payment for an interim dividend. Stanbic’s share was trading at sh235 at the close of trading on Thursday.