Banking industry sees bright future as year closes

Kampala. The banking industry is expected to experience growth as the last quarter of 2017 closes, Standard Chartered Bank Uganda chief executive officer Albert Saltson, has said.
He said: “Going into the last quarter of 2017, indicators show that GDP (Gross Domestic Product) growth that was subdued in the first half of the year has started to show some uplift.”
He added: “I would want to believe that, that uplift would also indicate that the banking sector in terms of lending to the private sector would grow. And with good liquidity, the sector would end the year stronger,” Mr Saltson said.
Uganda’s economy has experienced some headwinds in recent years growing at a rate of 3.9 per cent instead of the projected 5.5 per cent growth in financial year 2016/17.
Mr Saltson said GDP growth is at a modest pace although macroeconomic indicators such as interest rates are trending well.
This has impacted the private sector ability to grow which has in turn consistently affected banks’ to lend.
The banking sector has had its challenges over the last two years in terms of high non-performing loans that grew to Shs1.2 trillion in 2016/17, contracting overall lending to the private sector.
Mr Saltson states that this has evolved overtime and the NPLs have come down significantly.
Therefore, banks’ liquidity and ability to offer financial services is projected to get better than when non-performing loans were at their peak.
He made the remarks during the launch of the Live Your Dream campaign.
Mr Israel Arinaitwe, the bank’s head of retail banking, said the campaign will enable the bank’s clients to access personal loans of up to Shs200m at an interest rate of 18.9 per cent per annum with a 72 months tenor and repayment holiday of 75 days.
The 18.9 per cent rate comes at a time when the general sense in the economy is that commercial lower lending rates because of the cut in the central bank rate currently at 9.5 per cent.
Meanwhile, Mr Saltson assured clients of the 105-year old bank in Uganda that the bank is here for good and they should ignore gossip circulating on social media about the bank’s branch closure in Gulu or Mbarara.
He said: “We are the international bank of choice in this country with a great heritage, history, highly liquid and well capitalised. We run a sound business with state of the art systems, great people, great footprint and are positioned in the most lucrative markets in the world. It is totally unfounded for anyone to even mildly suggest that we are closing business in Uganda when we see a lot of opportunities for investment here.
He added: “The closure of Gulu and Mbarara branch is in line with our refreshed strategy and digital by design agenda geared towards developing market-leading online and mobile channels that deliver easy, convenient banking to all our clients. We have noted the migration of most of our clients to digital platforms and reduction in the branch transaction traffic.”