2018 HALF YEAR RESULTS

Stanbic Bank Uganda

UGANDA IS OUR HOME WE DRIVE HER GROWTH

USHS 1.1 billion

CSI INVESTMENT

USHS 96.1billion

NET PROFITS

1%53%

USHS1.7trillion

OFF BALANCE SHEET

USHS2.3 trillion

CUSTOMER LOAN BOOK

13%

USHS 3.7 trillion

DEPOSITSGROWTH

16%

Describe your 2018 half year performance and tell us some of the main key drivers?

We delivered a solid performance over the past six months due to the strength of our diversified business. I am pleased to announce that even in a challenging

environment, our Profits After Tax grew from UGX 95.4 Billion in June 2017 to UGX 96.1 Billion at the end of June 2018 and Customer deposits grew an impressive 16.2% to UGX 3.75 trillion up from UGX 3.22trillion in June 2017.

With a leading customer loan portfolio of UGX 2.3 Trillion and off-balance sheet portfolio of UGX 1.7 Trillion, Stanbic remains a key enabler in the agriculture, manufacturing, construction and trade sectors. But more importantly, we have a deliberate focus on supporting the growth of the SME segment of the economy given that they generate 80% of manufacturing output and create 90% of new jobs in the economy.

The bank’s total assets of UGX 5.1 Trillion are up by 7.4%% from the previous year of UGX 4.8 trillion meaning we are in a much stronger position to support major development projects and further facilitate economic growth.

What is your assessment of the economy, are we on the right path to recovery?

We have turned the economic growth conundrum corner; that I can confidently say. I was initially concerned that the Uganda’s GDP growth was in

despair. To place this into context, if you look at Uganda, between 1990 and 2011, we had two decades of between 7 % and 7.5% growth, but in 2012/13 we couldn’t even make 4.5%. Ordinarily, 4% is not worrying, but for Uganda it is not good enough because our population is growing at about 3.5%. We, therefore, need to be in the region of 7% to be able to get people out of poverty to have real inclusive growth.

But now we are beginning to see 6% and 6.5% in the last couple of quarters, a sign that we are turning the corner. Private sector credit

growth is also beginning to bounce back- at about 12 % after some anaemic growth the last couple of years. We are finally seeing growth in personal borrowing, agriculture, manufacturing and services; they have all turned the corner. I am very optimistic.

Notwithstanding that we have taken a hit on the currency in the last couple of months but partly for the right reasons. The currency is weakening partly because import demand is up showing renewed economic activity. There is huge demand for dollars which simply did not exist before, trade is back. That being said, its partly because oil prices are back up to USD 70 per barrel and subsequently our oil import bill has gone up by almost USD 300 million.

But the challenge now is how we make that growth consistent and more inclusive so that we are uplifting everybody. How do we improve the quality of growth? That is the USD 64 million question.

Despite the lowering of the CBR, there has been slow uptake of bank credit. How is Stanbic encouraging the private sector to borrow?

Stanbic has matched every single movement of the CBR for the last 18 months; reducing our prime lending rate from 25% to 17% today. The bank has developed and introduced a number of new

products that are a lot more targeted and therefore should make it a lot more attractive to borrow. The tailored products include our enterprise banking offerings that are targeted to SMEs, personal loans solutions, home loans and many more.

Agriculture remains Uganda’s most important economic sector, what is the bank doing to promote the sector?

Stanbic Bank has the largest active Agricultural loan book in the country. In addition, our wide branch network spread across the country ably supports the rural areas. This is particularly the case in the peak harvest

periods when we provide the much-needed financing and lines of credit that allow large

scale buyers to purchase produce from small holder farmers. Just to illustrate the importance we place on the agricultural sector of the UGX 200 Billion in new loans lent out over the past six months almost 35% went specifically towards Agricultural financing. Looking to the future, we plan to be more involved with small holder farmers by developing products more suited to their size and needs hence the reason we recently launched an Agri-financing partnership with Consortium for enhancing University Responsiveness to Agribusiness Development Limited (CURAD).

Over the period, Stanbic has launched a number of new business products and services (Bancassurance & Agent Banking), how are these performing?

Uptake of the new services has been very impressive with many of our clients making use of the alternative channels because of the convenience they provide. As far as agency banking is concerned, we have trained 800

agents who are active in the field with many more to come online over the next 6 Months. Agency banking transactions are by far the fastest growing with an estimated 1.6 million transactions for the full year 2018. Regarding Bancassurance, staff have been trained and the product is now available across most of our branch network. Our objective as a bank in introducing these services is to bring down our cost to serve and pass on the benefits to our clients.

Digital technology is an increasingly important part of your service offering, what new products can your customers look forward to?

We continue to improve our digital banking solutions to make it easier for our customers to enjoy the banking experience with us. One of our more innovative and practical solutions has been the introduction of our intelligent bulk Cash

Deposit Machines. These ATM machines are especially popular with small and medium sized business owners because they no longer need human interaction, yet they can access a

full range of banking services 24 hours a day. Looking to the future, we will enhance agent banking and make it more convenient for our customers while improving our app and online banking offering for our customers.

Oil and Gas has the potential to transform Uganda’s social economic outlook, what role is the bank playing in the development of the sector?

Investments in Uganda’s Oil and Gas sector will only have long term sustainable benefits to the country if a reasonable number of local companies are given the opportunity to participate in its development. Having recognized

that industry standards remain high and few companies have experience, we decided to help bridge the gap by supporting up-skilling of local SME companies through a Business incubator. The project was launched in May and so far 34 companies have graduated and our long-term objective is to have up to 500 companies graduate annually. About USD 15 billion is going to be spent in the sector over the next three years. How do we ensure that a minimum of 30% of this USD 15 billion is spent in the local ecosystem. In addition, Stanbic was chosen as one of two financial advisors with the responsibility of sourcing and arranging financing on the USD 2.5 Billion Uganda - Tanzania crude oil pipeline.

Looking ahead, what are the bank’s focus areas and priorities over the next 6 months?

Our Priority remains ensuring our clients’ needs are appropriately and effectively met. We will focus on strengthening our propositions by providing solutions

that meet our clients’ needs and help them achieve their aspirations.

We strongly believe that relentless focus on the client is the primary reason for our double-digit balance sheet growth across client deposits, Loans and trade and also the reason for Client revenue growth of ~8% in the first half of the year. We will keep this energy into the second half of the year through customizing services,and client journeys.

Stanbic Bank Uganda Limited. A financial institution regulated by Bank of Uganda. License Number A1. 013

HIGHLIGHTS EUROMONEY AWARD WINNER 2018UGANDA’S BEST BANK

GLOBAL FINANCE AWARD WINNER 2018 UGANDA’S BEST BANK

PATRICK MWEHEIRE

CHIEF EXECUTIVE

STANBIC BANK UGANDA LIMITEDSUMMARISED UNAUDITED

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2018

3. SUMMARY STATEMENT OF FINANCIAL POSITION

Unaudited as at

30 June 2018 Unaudited as at

30 June 2017 Audited as at

31 Dec 2017

Shs’ 000 Shs’ 000 Shs’ 000

Assets

Cash & balances with Bank of Uganda 492,074,761 674,494,747 856,532,804

Derivative assets 4,292,000 23,647,091 12,117,502

Government securities -FVPL 246,100,311 426,005,670 392,911,207

Government securities - FVOCI 664,841,957 607,482,240 516,269,586

Other investment securities 74,489 67,737 71,906

Current income tax recoverable 28,349,833 13,732,313 23,748,226

Loans and advances to banks 978,366,641 751,542,515 1,100,636,288

Amounts due from group companies 202,909,768 83,208,448 177,449,478

Loans and advances to customers 2,267,615,236 2,004,163,037 2,133,986,423

Other assets 70,767,746 49,328,354 47,493,184

Property and equipment 49,091,765 67,829,152 69,292,586

Goodwill and other intangible assets 115,352,206 75,664,720 71,909,841

Prepaid operating leases 83,153 93,491 88,322

Deferred tax asset 9,894,113 - 1,651,991

Total assets 5,129,813,979 4,777,259,515 5,404,159,344

Shareholders' equity and liabilities

Shareholder's equity

Ordinary share capital 51,188,670 51,188,670 51,188,670

Fair value reserves 1,773,900 13,791,943 19,788,336

Statutory credit risk reserve - 22,908,518 19,171,113

Retained earnings 782,410,164 673,263,136 692,131,502

Proposed dividend - - 90,000,000

Total shareholders equity 835,372,734 761,152,267 872,279,621

Liabilities

Derivative liabilities 36,834,280 4,600,764 4,211,626

Customer deposits 3,749,728,823 3,226,574,935 3,620,945,573

Deposits from Banks 83,232,076 232,025,493 342,769,174

Amounts due to group companies 40,799,842 265,947,154 266,614,006

Borrowed Funds 14,100,554 15,461,191 16,364,653

Other liabilities 292,157,118 198,961,009 208,173,495

Subordinated bonds/debt 77,588,552 71,918,539 72,801,196

Deferred tax liability - 618,163 -

Total liabilities 4,294,441,245 4,016,107,248 4,531,879,723

Total equity and liabilities 5,129,813,979 4,777,259,515 5,404,159,344

2. SUMMARY STATEMENT OF COMPREHENSIVE INCOME

Unaudited six months to 30 June 2018

Unaudited six months to 30 June 2017

Audited year ended

31 Dec 2017

Shs' 000 Shs' 000 Shs' 000

Profit for the period: 96,056,242 95,419,527 200,467,790

Other comprehensive income:

Net (gains)/loss on financial instruments-FVOCI (18,139,609) 10,720,820 16,717,213

IFRS 9 Adjustments -FVOCI 125,173

Total comprehensive income for the period 78,041,806 106,140,347 217,185,003

4. SUMMARY STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2017 Share capital Fair value

reserves

Statutory credit risk

reserve Proposed dividends

Retained earnings Total

Shs’ 000 Shs’ 000 Shs’ 000 Shs’ 000 Shs’ 000 Shs’ 000

At 1 January 2017 51 188 670 3 071 123 22 893 968 60 000 000 577 788 232 714 941 993

Net change in available for sale investments - 16 717 213 - - - 16 717 213

Profit for the year - - - 200 467 789 200 467 789

Total comprehensive income for the period - 16 717 213 - - 200 467 789 217 185 002

Transactions with owners recorded directly in equity

Dividend paid - - - (60 000 000) - (60 000 000)

Interim dividend paid - - -

General credit risk reserve - - (3 722 855) 3 722 855 -

Equity settled share based payment transactions - - - - 152 626 152 626

Proposed dividend - - - 90 000 000 (90 000 000) -

Balance at 31 December 2017 51 188 670 19 788 336 19 171 113 90 000 000 692 131 502 872 279 621

Unaudited six months to 30 June 2018

Unaudited six months to 30 June 2017

Audited year ended

31 Dec 2017

Shs’ 000 Shs’ 000 Shs’ 000

Interest and similar income 188,206,204 203,435,666 403,527,401

Interest expense and similar Charges (18,868,293) (25,341,305) (50,780,272)

Net interest income 169,337,911 178,094,361 352,747,129

Fee and Commission Income 75,098,912 68,789,639 135,830,032

Fee and Commission expenses (3,349,267) (2,382,189) (4,583,746)

Net Fees and commission income 71,749,645 66,407,450 131,246,286

Net trading income 78,227,050 68,881,096 144,964,170

Other operating loss/ income 1,710,451 428,542 7,047,223

Total operating income 321,025,057 313,811,449 636,004,808

Impairment charge for credit losses (10,962,730) (14,357,588) (28,922,014)

Total income after credit impairment charge 310,062,327 299,453,861 607,082,794

Employee compensation and related costs (73,551,124) (72,134,573) (141,491,545)

Other operating expenses (103,549,995) (98,841,145) (199,925,290)

Profit before income tax 132,961,208 128,478,143 265,665,959

Income tax expense (36,904,966) (33,058,616) (65,198,169)

Profit after tax 96,056,242 95,419,527 200,467,790

Earnings per share Basic & diluted** 3.75 3.73 3.92

Dividends

Final dividends proposed - - 1.76

1. SUMMARY INCOME STATEMENT

A copy of this statement can be obtained on our website at www.stanbicbank.co.ug. The financial statements were approved by the Board of Directors on 6th August 2018.

Mr. Japheth KattoChairman

Mr. Patrick Mweheire Chief Executive

Mr. Samuel Zimbe Director Company Secretary

*Half year position has been annualised

Mrs. Candy Wekesa Okoboi

5. STATEMENT OF CASHFLOWS

Unaudited six months to 30 June 2018

Unaudited six months to 30 June 2017

Audited year ended

31 Dec 2017

Shs' 000 Shs' 000 Shs' 000

Cash flows from operating activities

Interest received 165,824,422 219,377,994 397,013,080

Interest paid (17,590,275) (26,574,041) (50,366,037)

Net fees and commissions received 75,467,133 66,547,426 137,555,397

Net trading and other Income/recoveries 83,921,747 75,716,140 161,244,419

Cash payment to employees & suppliers (168,254,276) (155,291,053) (345,757,785)

139,368,750 179,776,467 299,689,074

Changes in operating assets and liabilities

Taxes Paid (42,028,222) (36 963 857) (83 959 360)

Increase/Decrease in Derivative assets 7,825,502 (13 580 474) (2 050 885)

(Increase)/Decrease in Government securities- available for sale (174,307,280) (514 618 049) 81 767 514

Increase/Decrease in Government securities- Trading 146,810,896 (175 521 399) (142 426 936)

Increase in cash reserve requirements (9,700,000) (8 560 000) (42 540 000)

Increase in Loans & Advances to customers (151,300,721) (61 329 639) (188 677 753)

Increasein other assets (26,994,633) (143 126) (4 481 259)

Increase in Deposits from customers 127,505,232 169 302 908 562 026 574

(Decrease) /Increase in Deposits from banks (259,537,098) (61 701 234) 49 042 447

(Decrease) /Increase in Amounts due to group companies (225,814,164) 23 141 908 23 808 760

Increase in Derivative liabilities 32,622,654 4 008 629 3 619 491

Increase/Decrease in Other liabilities 90,210,194 (803 830) 44 667 079

Net cash outflows from operating activities (345 338 889) (496 991 696) 600 484 746

Cash flows from investing activities

Purchase of property & equipment (5,067,869) (13 786 442) (25 130 425)

Purchase of computer software (33,108,993) - -

Proceeds from sale of property & equipment 25,093 253 619 334 534

Net cash used in investing activities (38 151 769) (13 532 823) (24 795 891)

Cash flows from financing activities

Dividends paid (90,000,000) (60 000 000) (60 000 000)

Increase/Decrease in subordinated debt 4,787,356 (218 847) 4 785 289

(Decrease) /Increase in Borrowings (2,264,099) 3 881 827 663 810

Net cash flows used in financing activities (87 476 743) (56 337 020) (54 550 901)

(Decrease)/Increase in cash and cash equivalents during the year (470,967,402) (566 861 539) 521 137 954

Cash and cash equivalents at beginning of the year 2,140,716,931 1 619 578 977 1 619 578 977

Cash and cash equivalents at the period ended 1,669,749,529 1 052 717 438 2 140 716 931

Stanbic Bank Uganda Limited. A financial institution regulated by Bank of Uganda. License Number A1. 013

Six months ended 30 June 2017

At 1 January 2017 51 188 670 3 071 123 22 893 968 60 000 000 577 788 232 714 941 993

Net change in available for sale investments - 10 720 820 - - - 10 720 820

Profit for the year - - - - 95 419 527 95 419 527

Total comprehensive income for the period - 10 720 820 - - 95 419 527 106 140 347

Transactions with owners recorded directly in equity -

Dividend paid - - - (60 000 000) - (60 000 000)

General credit risk reserve - - 14 550 - (14 550) -

Equity settled share based payment transactions - - - 69 927 69 927

Balance at 30 June 2017 51 188 670 13 791 943 22 908 518 - 673 263 136 761 152 267

Six months ended 30 June 2018

At 1 January 2018 51 188 670 19 788 336 19 171 113 90 000 000 692 131 502 872 279 621

Changes on initial application of IFRS9 - (25 088 479) (25 088 479)

Restated Balance at 1 January 2018 51 188 670 19 788 336 19 171 113 90 000 000 667 043 023 847 191 142

Net change in Other Comprehensive Income - (18 014 436) - - - (18 014 436)

Profit for the year - - - - 96,056,242 96,056,242

Total comprehensive income for the period - (18 014 436) - - 96,056,242 78,041,806

Transactions with owners recorded directly in equity -

Dividend Paid - - - (90 000 000) - (90 000 000)

General credit risk reserve - - (19 171 113) - 19 171 113 -

Equity settled share based payment transactions - - - 139 786 139 786

Balance at 30 June 2018 51 188 670 1 773 900 - - 782,410,164 835,372,734

4. SUMMARY STATEMENT OF CHANGES IN EQUITY CONT’D

STANBIC BANK UGANDA LIMITEDSUMMARISED UNAUDITED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2018

STANBIC BANK UGANDA LIMITEDSUMMARISED UNAUDITED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2018KEY PERFOMANCE INDICATORS

1. NET LOANS AND ADVANCESLoans and advances increased by Ushs 263 billion {13.2%} as at 30th June 2018 compared to same period last year 2017. As the economy rebounded and our lending interest rates dropped, this supported good credit growth across our customer segments.

2. DEPOSITS FROM CUSTOMERSCustomer deposits grew by Ushs 523 billion {16.2%} as at 30th June 2018 compared to same period last year 2017. This strong growth was supported by our strong customer focus executed through our client eco systems and nurturing new customer relationships. 3. TOTAL ASSETSTotal assets grew by Ushs 353 billion {7.4%} year on year. This strong growth was supported by strong customer deposit growth with excess liquidity being appropriately deployed across the different asset classes, mainly customer loans, in government securities and interbank lending.

4. SHARE HOLDERS EQUITYShareholders equity grew by Ushs 74 billion {10%} compared to the same period last year. This growth was largely driven by growth in the profits for the period.

5. TOTAL INCOME (NIR/NII)Total income increased by Ushs 7 billion, representing a 2.3% increase over the same period in 2017. The increase was seen on Non interest revenue (NIR) of 12% while the Net interest income (NII) dropped by 5% mainly due to the downward trend of interest rates. The income distribution split was at 47% to 53% on NIR and NII respectively compared to last year which was at 43% versus 57%.

6. PROFIT AFTER TAX (PAT)The net profit for the first half of 2018 closed at UShs 96 billion, 0.7% year on year increase. The slight uptick in profit is largely attributed to growth in non-interest revenues supported by growth in customer transactions. Operating costs were also well managed, growing by only 3.6% year on year and Credit risk also remained very strong with Credit loss ratio improving to 0.9%.

7. OFF BALANCE SHEETThis grew by Ushs 607 billion 53% compared to 30th June last year. Trade finance contingent balance are off-balance sheet items which include guarantees, letters of credit and bid bonds.

KEY RATIOS H1 2014 H1 2015 H1 2016 H1 2017 H1 2018

PROFITABILITY 1

Return on average equity(ROE) a 32.1% 27.5% 36.3% 27.7% 22.9%

Return on assets(ROA) b 4.0% 3.7% 5.2% 4.1% 3.8%

EFFICIENCY 2

Cost to income 52.4% 55.8% 50.0% 51.4% 51.9%

LIQUIDITY 3

Loan to deposit ratio 80.2% 79.6% 65.6% 62.1% 60.5%

ASSET QUALITY 4

Credit loss ratio(CLR) a 2.6% 1.7% 1.6% 1.4% 0.9%

Non performing loan ratio(NPL) b 4.6% 1.6% 1.9% 3.8% 5.9%

CAPITAL 5

Capital adequacy ratio(CAR)

Tier I a 18.2% 15.6% 14.1% 18.8% 15.4%Tier I + Tier II b 20.6% 17.0% 17.1% 22.8% 18.2%

1. NET LOANS AND ADVANCES

-

500

1 000

1 500

2 000

2 500

2014 2015 2016 2017 2018

Ush

s' b

illi

on

s

CAGR9.4%

1,582

1,845 1,864

2,2682,004

13.2%

3. TOTAL ASSETS

3,415 3,847

4,506

-

1 000

2 000

3 000

4 000

5 000

6 000

2014 2015 2016 2017 2018

Ush

s' b

illi

on

s

CAGR10.7%

4,777

7.4%

6. PROFIT AFTER TAX (PAT)

Ush

s' b

illio

ns

Ush

s' b

illio

ns

0

20

40

60

80

100

2014 2015 2016 2017 2018

68

95

68

107

CAGR9.4%

0.7%

7. OFF BALANCE SHEET 8. CREDIT IMPAIRMENT

0

500

1000

1500

2000

2014 2015 2016 2017 2018

271434

874

1,150

1,757

CAGR59.6%

53%24%

4. SHARE HOLDERS EQUITY

Ush

s' b

illi

on

s

-

200

400

600

800

1 000

2014 2015 2016 2017 2018

CAGR14.9%

428466

761

627

835

10%

2. DEPOSITS FROM CUSTOMERS

-

1 000

2 000

3 000

4 000

2014 2015 2016 2017 2018

Ush

s' b

illi

on

s

CAGR17.4%

1,9722,319

2,839

3,7503,227

16.2%

5. TOTAL INCOME (NIR/NII)

Total Income NIR Total Income NII

96

HALF YEAR JAN-JUN

HALF YEAR JAN-JUN

HALF YEAR JAN-JUN

HALF YEAR JAN-JUN

HALF YEAR JAN-JUNHALF YEAR JAN-JUN

HALF YEAR JAN-JUN

HALF YEAR JAN-JUN

CAGR: Compounded Annual Growth Rate

5,130

CAGR 14.9%U

shs'

bill

ions

Ush

s' b

illio

ns

136 144184 178 169

108117

150136 152

0

50

100

150

200

250

300

350

2014 2015 2016 2017 2018

8%28%

-3%

-5%

6%

29%

-10%

12%