Stanbic Bank beat every bank hands down a year ago posting in the excess of 100 billion in Net Profits. However, that trend was not going to continue into 2017 as certain variables changed. “2017 is going to be a very difficult year for banks and we knew this day would come. There is a collapse in rates, and oversee the profitability of the business now excluding DFCU’s numbers; 300 billion for the half year. So we are already running at less than the rate we were running last year.

Then to add insult injury, that means the securities which are about 22% of the assets in the bank have dropped 400 basis points you remember the chart I showed you earlier on with a unit curve collapsing. So banks have to make up almost 750 basis points of decline in our margins on both the loan book and in the government securities in 2017.” Said, Patrick Mweheire – Managing Director, Stanbic Bank – Uganda.

More money was made from the government treasury bonds for the likes of Stanbic Bank the lending. But with that area appearing less profitable, it was time to lend to the borrowers again. “We recognize that we were going into a very high-interest rate environment and we deliberately withheld risky applicants in certain sectors because we did not want to open the gates and then have to write the MPLs 12 months later and that paid off handsomely. I can tell you that now that’s reversed entirely; we have opened the gates in terms of risky applicants because we are quite pleased with the fact that our prime lending rate now is you know some at 18%, I think that increases the likelihood that you get paid back yet buffers you from MPLs and it’s a good time to be growing assets.” Said the Managing Director, Stanbic Bank. If the decision was to lend more by the banks, then the desired monetary policy aim of stimulating demand had come to pass sooner than later.