Home Business The COVID-19 effect on Banking Industry and The Enigma That is DFCU

The COVID-19 effect on Banking Industry and The Enigma That is DFCU

By Dan Atuhaire

The 2020 performance results have started trickling in, and the COVID-19 effect remains very apparent in financials available, so far.

Stanbic bank still leads the pack –albeit with visible declines in key areas such as non-performing loans and Foreign Exchange income with respective slumps of 110% and 46%.


1. The bank paid out an approximate 5 billion shillings more in fixed deposit interest than it did in 2019.

It looks like either people gradually became more risk averse or they finally started moving their money from Kameeza to the bank.

2. Whereas the bank’s Asset quality was reported as having reduced, Stanbic’s overall asset base is now a cool 8.57 trillion, up from 6.65 trillion in 2019.

3. The bank’s OPEX increased by 0.9% –quite impressive, considering that this also factors in things like salary increments (0.2%) and other expenses.


It also points to increased expense optimization measures such as process automation, service digitization and other cost reduction mechanisms (there are no detailed notes to the financials, so we decided to make a few guesses here).

4. The bank’s biggest gain was on loans and advances (22.79 billion), from 398 billion (2019) to 421 billion (2020).

The 22.79 billion represents 66.6% of the bank’s overall income growth. So yeah, even with COVID-19 around, people did not shy away from borrowing.

5. Not everyone who had a loan had the capacity to sustain repayments; this as evidenced by the 110% increase in non-performing loans, from 43.5 billion in 2019 to 91.8 billion.

The Enigma that is DFCU Bank:

In September 2020, DFCU posted half year results that showed an unaudited profit after tax of 29.1 billion UGX.

By this projection, one would have expected them to post something in the region of 40+ billion UGX by the turn of the year.

Instead, the bank’s overall net profit after tax reduced by 5 billion UGX to end up with 24 billion UGX by the turn of 2020.

COVID effect? Yeah, but perhaps DFCU could have borrowed a leaf from Stanbic and done better.

For now, the final result makes it seem like they went to sleep after the first half of the year, paid people salary, and simply woke up to prepare an end of year report.

If DFCU was a football club, it would have been the kind that scores a goal in the first half, spends the rest of the second half trying to protect their lead, before they suddenly wake up after conceding a last-minute penalty.


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