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CBA, Post Bank in a deposit taking partnership

By Benon Ojiambo

Added 5th May 2016 11:12 AM

The partnership is aimed at increasing their clients’ access to services through Post Bank’s wide coverage

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The Executive Director of the Commercial Bank of Africa CBA Uganda Limited , Joseph Mahugu (left) chat with the Executive Director of Credit and Business Growth in Post Bank, Alex Kayaayo after signing an agreement during the launch of collection channel between CBA and Post Bank Uganda Ltd at CBA offices, Kampala on 3 May 2016. Photo by Ronnie Kijjambu

The partnership is aimed at increasing their clients’ access to services through Post Bank’s wide coverage

Commercial Bank of Africa Uganda Limited (CBA) and Post Bank Uganda have signed an agreement that shall enable CBA clients make cash deposits in PBU branches countrywide while being reflecting on their CBA accounts.

While announcing the partnership at CBA head offices at Twed Towers in Kampala on Tuesday, Joseph Mahugu, CBA executive director, said that the move is aimed at increasing their clients’ access to services through Post Bank’s wide coverage.

Mahugu also said that the initiative is line with the strategy of increasing channel choices for the clients.

“Post Bank Uganda will on behalf of CBA Bank, receive cash deposits from their (CBA) clients at all their respective locations especially where CBA has no physical address. The service will be available to CBA Bank customers at all Post Bank branches, mobile vans and points of sale terminals across the country,” he said.

He noted that they sought the partnership because they have been disadvantaged and have not been able to serve their clients due to lack of reach and the initiative shall streamline customer collections process and enable them have extract additional liquidity for their day to day operations.

According to Alex Kayaayo, Post Bank’s executive director, the bank has a total of 37branches that are supported by 9 mobile banking vans operational in 50 districts across the country as opposed to CBA’s only two branches located at Twed Towers and Village Mall, Bugolobi in Kampala.

“With the passing of the Islamic banking that allows agency banking in Uganda, we shall see more of such partnerships coming up because c(ommercial banks shall not have to be everywhere to transact business. This is one way of cutting costs while reaching more clients,” Kayaayo further explained.

Mahugu, however, maintained that the partnership was only a deposit taking agreement between the two institutions and added that they were so different with different management teams.

He said that CBA’s strength still stands and is still growing as witnessed by increase in customer deposits between 2014 and 2015.

The institution’s cash deposits grew from sh11b in 2014 to sh33.8b in2015 while net loss between 2014 and 2015 reduced from sh4.59b to sh4.06b in the respective years and according to Mahugu, this demonstrates their commitment to improving on the financial performance.

Net loans and advances, on the other hand, grew approximately threefold from sh11.9b to sh33.9b between 2014 and 2015 respectively.

However, this year alone saw some banks merging of branches as a way of cutting down operational costs. Equity Bank, though with a network of 28 branches in the country, transferred Masindi Branch to Hoima Branch, Tororo Branch to Mbale Branch and Jinja Road branch in Kampala to Oasis Branch.

Stanbic Bank also merged Bushenyi Branch with Ishaka Branch to create a new Ishaka Branch in early March.

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