The 105 year road for Stanbic Bank Uganda

From a small government owned bank to a lucrative African bank, Stanbic Bank has undertaken major changes that have spurred it to the forefront of world banking as Philip Odera the bank's Chief Executive explains in this interview.

Give us a background to Stanbic Bank's growth?

The Government sought to sell Uganda Commercial Bank over ten years ago. It had become a drain on the national treasury and therefore required a lot of resources to ensure its continuity. By then it was clear to Government that it did not have a place in running banks. It had also ruled itself out of business.

At that time, we had committed to the Government that at some point we would sell shares to the public. We ceded 10% shares while government gave up its balance of 10% resulting in a 20% shares to the public.

The resulting Initial Public Offer (IPO) was a huge success. By the time we bought Uganda Commercial Bank, it had expanded to about 63 branches which were largely unprofitable. We went through a process to selectively expand.

We established branches where we thought it was profitable to do so. Over the years we have expanded to 91 branches, increased Automatic Teller Machines (ATMs) to 193 and strategically located them across the country.

With these, all our customers including farmers and teachers can access their money from anywhere. We have established group accounts where people in institutions such as the police and the army can easily access their money without hassle.

Such services have made banking with us reliable and convenient. We have Visa cards where people can access their money from any part of the world. We have grown over the last few years at a minimum of 22% profit after tax.

In 2006, we recorded a profit of 35 billion Uganda shillings after tax. This shot up to 122 billion shillings profit after tax last year. We have experienced this growth amidst the rising number of competing banks.

You've grown despite the stiff competition, what have you done differently to soar above your competition?

It is important to understand your customers and to know what they want. If a customer owns a business in Kasese, they will require banking services there. If you can't serve them there as a bank, they will walk away from you.

Many banks have not been able to reach customers in some parts of the country, which we are doing because of our wide network.

We have been able to provide solutions to customer needs because we listen to them. Unlike some banks, we avoid selling products, we sell solutions.

We are for instance providing financial support to farmers, helping them to add value and to find a market for their products. Recently, we visited Fort Portal where we support tea farmers in their business. Of all banks, we provide the most solution-driven lending for agriculture. It is such services that have enabled us to remain relevant to our customers.

How have you managed to operate through the hard times of rising inflation and growing interest rates without upsetting your customers?

We have two categories of customers - individual and corporate. We deal with them in different ways. We talked to our individual customers.

When the interest rates shot up, we looked out for their major concerns. We discovered that many were concerned about keeping their homes.

We protected them, we did not increase the mortgage rates. For corporate clients, we revised loan repayment schedules to ease repayment. We avoided repossessing property as we do not make money from repossessing property.

How do you reassure the public that Stanbic Bank cares about the ordinary person?

We have almost a million customers, about 90% of those are ordinary people. Expansion of our branches is in the rural areas in places such as Koboko, Bundibugyo, Kalangala is testimony to this. These are people we are very proud to serve.

What challenges have you encountered in your efforts to grow and expand?

The cost of setting up infrastructure and ensuring that it complies with the standards of security and safety standards are very high. Communication has also been a great challenge. We rely on links provided by telecommunication companies.

In some places, these links are very poor that data does not flow very well. This affects our operations. It is not easy to find the right kind of people for different places. Some people seem to work better in some places than others.

Determining the right kind of people to serve in different places is a daunting task. We are a cash driven society therefore we constantly need to move cash from one place to another.

This is not easy especially because of the poor road network and infrastructure in different parts of the country.

What is Stanbic Bank's vision for the future?

The future is very bright. We believe it will be driven by the work that will come from exploiting oil and gas resources, infrastructural development and investment. These will have a multiplier effect on the economy. It will give a good opportunity for the economy to grow and by extension enable us to grow.

What are your thoughts on 150 years of Standard Bank Group?

Over the last 150 years, we have had a very successful journey. Any institution that has been around that long shows strength and ability to absorb shocks. Stanbic Bank has gone through lots of such shocks and has developed structures to manage. Having such a parent as Standard Bank Group has helped us to grow. This, coupled with a bright future for Uganda, will stand us in good stead.

Word from the Stanbic Bank Board Chairman, Hannington Karuhanga. Read more

The story of the growth of Stanbic Bank is the story of some of the bank's longest serving employees. From the old days of using ledger forms to post customer deposits, relying on manual typewriters to the times of Internet Banking, it is a story of resilience and patience. As different staff members tell, it is a story of hard work. Read more

When I joined in 1983, computers were rare to find. Operations took such a long time as we had to sit through every activity, sorting things manually. We used to count money as if we were peeling bananas.

MARSH Uganda
The New Vision Newspaper
02 Nov 2012