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Stanbic spent Shs 422 billion on local goods and services

Sam Mwogeza, interim Stanbic bank chief executive

Sam Mwogeza, interim Stanbic bank chief executive

Stanbic bank paid Shs 354 billion in taxes in Uganda last year, cementing its position as one of the top five companies in the country to contribute to the country’s treasury.

The taxes paid not only point to the bank’s commitment towards contributing to Uganda’s development needs, but it also shows how compliant the company is, writes Moses Mugalu.

The taxes were paid from the record Shs 1.194 trillion that the bank generated in 2023. Stanbic paid the taxes after it recorded a net profit of Shs 412 billion, the biggest amount in Uganda’s financial industry. The bank’s profitability was attributed to the prudent management within the bank and the favourable investment market that Uganda has offered to financial institutions.

Stanbic bank is crucial to Uganda’s economy. As the biggest bank in terms of assets and revenues generated, Stanbic is an important indicator of the health of the economy. Many players look at Stanbic for guidance on which asset classes to invest in.

Stanbic bank made heavy investments in the government securities market. Government issues securities, through Bank of Uganda, to borrow money. This money is usually used to cater for the country’s development programme. Stanbic bank is also one of the biggest lenders of credit in the market, fuelling the growth of small and medium enterprises.

These companies use the credit to grow their businesses through making investments in projects or acquiring inputs needed to run their operations. The loans that Stanbic issued trigger other activities such as creating employment opportunities, raise the tax revenue base, just to mention a few.

Nevertheless, Stanbic bank realised some losses on the loans it issued to small and medium businesses. Up to Shs 54 billion was lost after the small and medium enterprise segment failed to service their loans, accounting for 78 per cent of the total bad loans. Overall, the bank recorded bad debts of Shs 69 billion.

The bad loans did not dampen the bank’s mood, however. Stanbic bank spent substantial amounts of money when it procured goods and services from local traders. The bank spent Shs 422 billion in local spend. Of this amount, Shs 253 billion was spent on the bank’s local staff, 99 per cent of whom are Ugandans. The other Shs 169 billion was spent on local suppliers.

Some of the Ugandans who enjoyed this cash bonanza from Stanbic include the shareholders. The bank paid out dividends worth Shs 31 billion to Ugandans. It paid another Shs 124 billion to foreign institutions. The bank kept Shs 257 billion in retained earnings.

mugalu@observer.ug

Comments

+1 #1 apollo 2024-04-18 09:07
It still puzzles me, how that Stanbic Bank is able to make massive net profits and yet the business community that it serves, is wallowing in debt, foreclosure, losses and a generally hostile business environment.

As I write, the trading community has closed business by way of a mass protest action over the economic hard times they are facing.

What I read out of this calamity is that the banking industry is not a ship to keep afloat the business community or even sail it to profit and success. Instead, it is a leech, that sucks life blood out of its victims and kills them in the process.
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0 #2 Ugthinker 2024-04-23 10:50
With all that profit, why is Stanbic customer service so poor???

One day i had to go to three branches before i could be served!

Kabalagala- queue was running out into parking yard!
Lugogo- there wasn’t enough money! imagine after spending thirty minutes in the queue!

Surprisingly Ugandans are so used to poor services, no one complained!
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