Prime
Stanbic Bank projects slow decline in interest rates
Interest rates in Uganda continue to be a challenge to access to credit. Photo / File
What you need to know:
- Interest rates are likely to remain high due to a volatile global financial market
Stanbic Bank has said that interest rates will likely decline in response to Bank of Uganda’s reduction of the Central Bank Rate, but the rate will not be as fast as expected due to elevated global financial market volatilities.
While releasing the bank’s half-year results, Mr Francis Karuhanga, the Stanbic Holdings chief executive officer, said the economy is expected to continue growing as borrowers take advantage of reducing interest rates due to movements in the Central Bank Rate, which had seen private sector credit demand dampened in the last six months.
Stanbic’s prime lending rate, he said, has hovered between 16 percent and 22 percent depending on the client’s credit history, supporting the bank’s half-year performance, in which profits rose by 17.6 percent to Shs235b from Shs200b.
The banks also said that loans and advances had risen to Shs4.3 trillion from Shs3.9 trillion in the first half of 2023, while deposits grew to Shs6.5 trillion from Shs6.2 trillion.
During the period, Stanbic, through its finance and capacity building programme, advanced Shs127b to Saccos at an interest of between 10 percent and 12.2 percent, while Shs100b was invested in women-owned enterprises at 15.5 percent.
Therefore, Mr Karuhanga said the good performance, in a meeting on August 15, had influenced the company to announce an interim dividend of Shs2.73 per share or a combined Shs140b for the period ended 30 June .
During the period, Stanbic’s total assets grew to Shs9.7 trillion from Shs9.4 trillion.
Mr Robald Makata, the Stanbic chief finance officer, said the bank registered a reduction in non-performing loans to 1.6 percent from 3.7 percent, and this is expected to reduce further due to movements in the Central Bank Rate.
“The rates are beginning to reduce and the demand for loans in manufacturing, trade, agriculture, and personal is also picking up,” he said.
In its June State of the Economy report, Bank of Uganda noted that private sector credit had remained subdued, reducing to 7.8 percent in the three months to April 2024 from 8.4 percent.
