The Covid-19 pandemic caught nearly everyone off guard, despite that companies have had to adjust. Anne Juuko, Chief Executive – Stanbic Bank Uganda spoke about how Stanbic had overshot its Corporate Social Responsibility budget in the first half of 2020 to support government efforts and the community. In the conversation below, she highlights how the bank has responded to the pandemic.
Q. How has the bank supported the economy during the COVID 19 pandemic?
From the start of the pandemic, we recognised the devastating impact COVID 19 would have on our customers and the ripple effect on the economy. As a result, Stanbic took quick action to provide the necessary and urgent support to our clients, employees and the wider communities in which operate.
Amongst our priorities, we put in place measures to ensure the health and safety of our customers and employees. It was and still is critical to minimise infections, so we implemented the necessary health precautionary measures by placing sanitizers at the various touch points including ATMs, branches and Stanbic offices across the country as well as adhering to the necessary social distancing measures. With the precautionary measures in place, we continued to provide banking services and kept a 80% of our branches open to ensure our customers had access to our services.
In addition, we waived all charges on our digital banking platforms so that customers could transact free of charge on our platforms like online Banking and Mobile Banking systemsto make day to day payments and account to mobile money transactions.
We also are offered credit relief programmes to business and personal customers tailored to suit their circumstances. Our aim was to ensure that we see that their businesses are sustained and the impact on the economy is minimised.
We also doubled our investment in Corporate Social Responsibility to enhance all efforts to support vulnerable communities during the pandemic. Our spend for H1 is. 150% over and above our budget to ensure we provided the much-needed support in communities and to the Government through the provision of Protective Gear and fuel for front line workers complimented by our partnership with the Uganda Bankers Association.
We have also continued to enhance our efforts to support Education, the key pillar of our social investments. We pivoted and changed our approach to delivering our education programmes through the National Schools Championship which were been delivered virtually to students and the public via radio, live television, facebook live, twitter etc. Further to this, the bank hosted an inaugural Education Forum bringing together private sector players to discuss how the private sector can support the government in enhancing education with a focus on skilling students especially in the new normal.
Stanbic Bank remains committed to its purpose, Uganda is our home, we drive her growth, and through our interventions we shall continue to support our customers and communities by stand together through this trying time and working to make their dreams possible as evidenced in our new promise IT Can Be.
Q. How are you supporting businesses during this time and how have you responded to the changes in the Central Bank Rate?
In addition to the interventions I have mentioned above, we have consistently re-priced our prime lending rate in response to every CBR movement by the Central Bank over the past 10 years (as shown in the graph below) and at present, Stanbic hasone of the lowest prime lending rates of all active retail financial institutions in the country. We lowered our base lending rates in line with the CBR cut in April 2020 during the pandemic. The Central Bank has further revised CBR in June 2020 and effective 1st August 2020, we are reducing our prime lending rate to 16.0%. Our aim is to ensure our customers can benefit from more affordable lending rates as interest rates in the market are reviewed.
Q, How many loans have been restructured?
The most recent reports from the BOU indicate that at an Industry level, approximately 14%, UGX 2.02 trillion, of the total Banking loan portfolio of UGX 14.7 trillion (Apr’20) has been restructured. Within Stanbic Bank, over 1,300 loans have been restructured and majority are within the SME Sector.
Q. How have you supported the SME sector that has been greatly impacted by the pandemic?
Stanbic has a portfolio of over 40,000 SME clients and a key step we took during the pandemic was to offer relief programmes. We encouraged all our SME customers whose incomes have been impacted as a result of COVID19 to apply for a loan repayment holiday based on their unique circumstances. Over 60% of the loans restructured in the Stanbic’s portfolio have been SMEs.
We have encouraged Businesses to sign-up on to our Digital platforms specific for SMEs (Business Online & Enterprise Online) where we also applied Digital waivers on some of the transactions. Other alternate platforms we provided include the Cash Deposit Machines (CDMs) and for larger clients the option of enrolling the services of Cash in transit (CIT).
A key initiative we drive that support SME’s is the Stanbic Business incubator, aimed to provide training and capacity development for SME’s in Uganda. The trainings are free charge for SME’s and more importantly – you do not have to be a Stanbic client to apply and participate.We have also expanded this programme and successfully launched regional incubator centres in Hoima, Mbarara and Gulu in order to avail training and development opportunities to SME’s upcountry.
Q. What lessons can be drawn from this experience for banking sector?
With a global event of this magnitude, the pandemic has brought forth many lessons not only for Stanbic but for the sector as whole.
The first and most important aspect was to place people first. This has always been the priority for Stanbic and taking care of our team member’s health and well-being as we have navigated through the pandemic. We wanted to ensure everyone maintained a good mental state and was given enough time to adjust to the changes happening around them. Managers regularly always checked on their teams and we provided health care support.
As business, we have been able to prove our strength as market leader having successfully implemented our business resilience plans that have sustained the bank and enable us to provide the necessary services to our customers even during a crisis. I am proud of this fact because it’s we were able to continue helping our clients while operating in a different environment that has also pushed us to rethink our operating models and still achieve efficiency.
We accelerated digitization agenda to ensure we continue to provide more innovative and efficient banking services to our clients. We focused heavily on ensuring our digital platforms provide all the necessary services that our clients need. As a result, we have reinvented how we serve our clients in order to create real value and the skills sets of our teams must be aligned to the new requirements. We have therefore placed more focus on skills around complex problem solving, critical thinking, cloud, Data and Cyber security which have now been elevated.
And lastly business agility. Agility in business planning has been critical. We have had to rethink several processes in order to adapt and reshape our focus areas as these instantly changed with COVID -19. We have changed our strategy in response to customer’s needs and continue to reassess our plans to ensure we are placing our customers at the centre of everything we do.
Q. Looking ahead, considering the pandemic, what’s your view on the future of the banking sector?
The pandemic presents an opportunity for us to reshape the way we deliver financial services to our clients. A lot of work must be done working in close collaboration with Government to ensure the right measures and polices are put in place to sustain the economy.
That said, the Impact of COVID-19 on the Financial sector is going to be a lagged one. Unlike sectors such as Tourism, Media, Consumer and Commercial Real-estate where impact has been immediate and can easily be quantified, the impact on the Financial sector is always delayed and time for recovery is also expected to take longer (this can reach up to 2 years as witnessed through previous cycles). This is driven by the fact that we are cushioning businesses right now through waivers and credit restructures while following the central bank guidelines. Various sectors have different recovery times, and some could extend to over a year. Depending on how these recovers, the sector may be forced to take in extra credit provisions which will impact non-performing loans ratios of the sector.
However, we remain optimistic given the relaxed measures put in by government to reopen activities and business. We hope to see some business activity pick up over the coming months. As Stanbic, we are committed to our purpose, to drive Uganda’s growth and continue to take the necessary actions to support our clients and contribute to the growth of Uganda’s economy.