The Chief Executive Officer (CEO) of dfcu bank Mathias Katamba has revealed that the economy continues to recover with the GDP estimates for financial year 2020/21 closing at 3.3 percent. According to Katamba, the economic recovery alluded to stronger household consumption.
Since Uganda confirmed the first case of covid-19 pandemic in March 2020, the country has witnessed two lockdowns which have greatly affected the country’s economy.
Despite the ongoing COVID-19 pandemic, dfcu posted good financial performance in the first half of 2021 with consolidated net profit after tax increasing by 33 percent from Shs 29.1 Billion in June 2020 to Shs 38.8 Billion in June 2021.
While several measures continue to be instituted by stakeholders to stem the pandemic and minimize disruption, the uncertainty on the direct and indirect impact on the future recovery of the economy remains.
“The first half of the year has been mixed, characterized by a second wave of COVID-19 infections with new variants and the lockdown that was instituted to curb the rising pace of infections across the country and the resultant strain on the health sector,” he said.
Below is the interview.
What is your assessment of the operating environment for period under review?
The first half of the year has been mixed, characterized by a second wave of COVID-19 infections with new variants and the lockdown that was instituted to curb the rising pace of infections across the country and the resultant strain on the health sector.
On a positive note, the economy continues to show signs of recovery with the GDP estimates for financial year 2020/21 closing at 3.3 percent which was higher than projections earlier in the year of 3.1 percent driven primarily by stronger household consumption. The financial year 2021/22 is expected to show even stronger growth especially if vaccinations pick up and other critical sectors of the economy are opened.
How did dfcu Bank perform considering the challenging environment?
Despite challenges in the operating environment, dfcu consolidated net profit after tax increased by 33 percent from Shs 29.1 Billion in June 2020 to Shs 38.8 Billion in June 2021. This upside in profit performance was driven by a 23 percent growth in net income. In terms of financial positions, we continued to shore up liquidity given the uncertain environment with a 2.6 percent increase in liquid asset holdings.
Due to the constricted economic activity, the Bank took a conscious approach to credit growth resulting in net loans and advances to customers reducing by 4.1 percent. The marginal drop in customer deposits was a result of the deliberate move to minimise the cost of funds as we continued to gradually release the expensively priced deposits. On the other hand, the impact of the restrictions and slow pace of activity reflected on our customers as the provisions for loans and advances to customers increased from Shs 8.7 Billion in June 2020 to Shs 36.7 Billion in June 2021.
What is dfcu Bank doing to galvanize support for customers, communities and the economy to recover?
We continue to provide relief in terms of restructures and repayment moratoriums to customers whose businesses have been impacted by the pandemic. More than 45 percent of our customers have received some form of credit relief to date. As a mechanism to further promote access to credit for small business and households, we started deployment of our mobile loan solution to our consumer banking customers and leveraged our customer relationship management to provide new and additional funding to business customers.
At the national level, we continued to engage with stakeholders in key sectors of the economy in the areas of Oil and Gas particularly, to promote the participation of customers in the local content component. We continue to sponsor the Best Farmer initiative which promotes the use of best practices in agribusiness in conjunction with our partners. The Bank also continues to support Savings groups and SACCOs (Savings and Credit Cooperative Organizations) through capacity building programs and small farmer-based groups through our Agricultural Development Centre.
Our staff has shown that, regardless of the circumstances, they will go over and above to support our customers, communities, and one another. We are providing tailored support across our footprint to help them manage through the pandemic.
What should customers and stakeholders expect?
Our efforts will continue to focus on driving efficiency of operations and harnessing our digital investments to sustain customer ease of doing business with us. We will also continue to play our role of ‘making more possible for our customers’ by providing much needed funding to support both individuals and business to recover. The pandemic is still with us for some time, so the health and safety of our customers and staff will continue to be a priority as well.
