Bank of Africa sees 34.8 percent rise in gross profit as Housing Finance Bank records 2.5 percent fall

By George Mangula

Bank of Africa realized improved business if we are to go by the summary of its financial statements indicating transactions as of end of December 2019.

The bank earned about Shs26.7 billion in gross profit as of December
2019 compared to about Shs19.8 billion in 2018, a 34.8 percent jump.

The bank’s cash and balances with Bank of Uganda increased to about
Shs120 billion from about Shs104.7 billion it deposited with the central bank in 2018.

The lender had customer deposits move upwards to about Shs758.6
billion in 2019 from about Shs569 billion it received at its counters
in 2018.

The performance of loans and advances to customers improved by 16.3
percent as the bank gave out about Shs400 billion in 2019 compared to
about Shs344 billion extended to clients in 2018.

The graph for the non-performing loans showed bad business as it rose upwards to about Shs8 billion from about Shs6 billion in 2018.

Meanwhile the bank was forced to write off about Shs3.7 billion as bad
debt in 2019, which was higher than about Shs3.5 billion cancelled in
2018.

The bank’s total assets position slightly improved in 2019, as it
posted about Shs803 billion compared to about Shs800 billion gathered in 2018.

In a similar development, Housing Finance Bank has recorded a 2.5 percent slump in gross profit.

The summary of the latest financial statements of Housing Finance Bank
Limited shows business did not go well as expected in the year ending
December 2019 as Uganda’s leading mortgage provider earned less gross
profit compared to the year ending December 2018.

During the reporting year, HFB registered a decline of 2.5 percent in gross profit as it earned about Shs26.9 billion compared to about Shs27.6 billion it made in the year ending December 2018, much as its profit after tax increased to Shs22.5 billion from Shs20.9 billion in 2018.

Business for the financial institution still went sour in 2019 as the non-performing loans increased by 73.9 percent to about Shs36 billion compared to about Shs20.7 billion the lender recorded in 2018.

However, customer deposits rose to about Shs560 billion in 2019 compared to Shs451 billion it received in 2018.

The bank further did well in its lending line as it realised a slight decline in the bad debts written off of about Shs5.6 billion in 2019 compared to about Shs6.9 billion it wrote off as bad debts in the year ending 2018.

The bank’s cash and balances with Bank of Uganda (BoU) as end of December 2019 rose sharply to about Shs115 billion compared to about Shs62.8 billion deposited with BoU in the year 2018.

During the reporting period, the bank saw a rise in loans and advances
to the tune of about Shs553.5 billion compared to about Shs511.6 billion it released to borrowers in 2018.

The lender saw its total assets accumulate further in 2019 as the figure grew by 17.3 percent to about Shs912 billion compared to about Shs777 billion reached in 2018.

The bank’s managing director, Michael K. Mugabi says: “This has been
made possible by dedicated focus on our customer experience, solid
strategic partnerships, strong passion in supporting Uganda’s economic
and social development.”

HFB published the financial statement in accordance with the Financial
Institutions (External Auditors) Regulations, 2010 and Financial Institutions Act 2004, as amended. However the bank adds that the summary financial statements do not contain all the disclosures required by International Financial Reporting Standards, the Financial Institutions Act 2004, as amended and the Uganda Companies Act.

“Reading the summary financial statements and the auditor’s report thereon, therefore, is not a substitute for reading the audited financial statements and the auditor’s report,” Price waters house Coopers, the firm that compiled the financial statements says.