Equity Uganda maintaining positive outlook despite dip in 2022 profits

Equity Uganda’s Anthony Kituuka is unfazed by 2022’s dip in profits
In Summary

Regional lender Equity’s Ugandan unit remains upbeat about prospects for 2023, despite booking a 52pc dip […]

Regional lender Equity’s Ugandan unit remains upbeat about prospects for 2023, despite booking a 52pc dip in pre-tax profit for the trading year that ended December 31, 2022. Even after the setback, the lender’s fundamentals are on a solid trajectory, with key indicators maintaining double digit momentum.

Equity Uganda’s performance reflects the mixed fortunes of a year during which the industry saw strong underlying growth, but whose gains were dragged down by a need to close the book on assets turned toxic by the Covid-19 pandemic.

Even with pre-tax profit falling to UGX 56.4 billion against UGX 118.2 billion in 2021, the bank did not make an absolute loss, with officials arguing that the numbers only reflected the deep impacts of provisioning for bad debt. The attrition stemmed from three segments – hospitality, agriculture and education, where many enterprises failed to recover from the disruption caused by the Covid-19 pandemic.

Briefing media on the unit’s performance today, Equity Uganda Managing Director Anthony Kituuka said he expected “a significant bounce-back,” in 2023 because the fundamentals remain solid.

“The question should be is your engine running correctly? I think our engine is running correctly,” Kituuka said of the outlook for the year that ends in December 2023.

Customer deposits surged 21pc from UGX 2.285tn to UGX 2.755tn, total assets expanded 20pc to UGX 3.376tn, while the customer base grew 32pc to 1.8 million unique accounts. That increase was in tandem with a 39pc fan-out in the footprint of bank’s agents whose number increased from 5,572 at the start of the year, closing at 7,727 agents.

However, a more cautious posture to risk, saw growth in net lending slowdown to 6pc (UGX 1.632 trillion) compared to 24pc the previous year.

“Our overall performance demonstrates resilience in the face of economic contraction and other associated challenges experienced post Covid-19 pandemic. Our continued focus on operational efficiency and strategic growth initiatives have enables us to deliver positive results for our shareholders and I am fully confident that the foundation we set in 2022, will help us deliver on our strategic priorities and further strengthen our financial performance,” Kituuka said.

The bank that sees itself as an agent for social change, will continue to direct lending towards support to  the agriculture, manufacturing and trade value chains among others. Lending to small-scale farmers reached UGX70.3bn during 2022. Lending through Eazzy Stock, a collateral free instant-loan digital product primarily aimed at distributors of manufactured output, peaked at UGX 10bn daily during 2022.

Kituuka further revealed that technology was driving scale, with 94pc of transactions now taking place outside the brick-and-mortar branches. Agency banking has become a key pillar of customer interface, with the lender’s 8,000 agents moving 5 million transactions and UGX 1.3 trillion in lending per quarter. He added that the continuing migration to digital banking signaled increasing customer confidence in that mode of delivery.

“The market has moved. If fraud had impacted trust, people would come back to the branches. Instead, we are seeing movement in the other direction because we have made the systems more secure and fraudsters are now only exploiting customer ignorance,” he said.

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