STOCK MARKET: Bank profits up, dfcu suspends trading

By Samuel Sanya

Bankers have beat the odds once more to register high profit margins for the year 2012. Multiple bank documents reveal that investments in securities had a lot to do with the amplified profits.

Barclays registered a 58% growth in fair value gains on equity investments to sh587m, from sh372m a year before, according to the banks audited financial results.

The strong returns on equity contributed to the bank’s sh44.5b profit for the year 2012, up from sh25b the prior year. The bank made a sh869m loss in derivatives trading.

Bank of Africa registered a sh9b profit, up from sh7b profit the year before. Centenary Bank made a sh69b profit, up from sh57b in 2011.

Centenary Bank made sh1.7b return from financial instruments at fair value, up from a loss of sh2b the previous year.

Traders in the banking sector have undergone training in the world acclaimed ACI dealing simulation programme to improve their understanding of bigger financial markets as Uganda integrates into the East African Community.

“The Dealing Simulation is designed to teach physical trading techniques, by experiencing the hectic demands of a dealer’s job in a realistic and responsible but controlled environment,” said Chris Howlett, the director of ACI Australia.

“The training enables young bankers to gain insights into technical analysis, risk management, trading psychology and exchange traded markets,” Howlett added.

Participants from various banks were hosted for a fiveday intensive retreat at the Speke Resort Munyonyo where they experienced the life of a bank trader in a sophisticatedmarket such as New York or London.

Howlett says the programme enables bankers to gain oneand- half years’ trading experience in one week. The Bank of Uganda funded programme will be returning to Uganda in February next year to make the banking sector more resilient.

Meanwhile, dfcu Bank suspended trading this week as the main sharedolder, British equity fund – Actis, sold 17.48% off its shares to Norfund, a Norwegian development organisation. Rabo Development B.V, a subsidiary of the Rabobank of the Netherlands, will purchase the remaining 27.54% stake on offer as part of its expansion strategy in developing countries.

Kenneth Kitariko, the African Alliance Uganda boss, noted that the four week voluntary suspension from trading on the Uganda Securities Exchange will limit speculative transactions.

The National Social Security Fund (NSSF), which holds major stakes in listed companies Stanbic Bank, Bank of Baroda bank, Dfcu bank, Uganda Clays, New Vision, Umeme, Safaricom and Centum, has registered a decrease in its cost to income ratio to 17%, from 27%. NSSF also holds significant shareholdings in Housing Finance Bank.

The pensions fund now has assets worth sh3 trillion, up from sh2.3trillion, with fixed income investments totalling sh2.4trillion.

Only Umeme traded on Tuesday, making sh1.38m from 4,400 shares. The All-share index dropped to sh1,487.87 from sh1493.24.