interviewBy Peter Nyanzi
Crane Bank has grown to become the largest indigenous commercial bank in Uganda with a paid up capital of more than Shs 200 bn. Mr. A.R Kalan, the managing director, spoke to Peter Nyanzi about the bank's performance in 2012 and future plans.
What were the key highlights of Crane Bank's performance in 2012?
2012 was one of the years that Crane Bank had excellent results. Our total assets increased by 21.4% from Shs 960 bn to Shs 1.2 trillion. Customer deposits increased from Shs 680 to Shs 842 billion. Customer deposits rose from Shs 684 billion to Shs 842 billion. The capital and reserves increased from Shs 180 bn to Shs 260 bn - an increase of 44%.
The profit increased from Shs 90 bn to Shs 103 bn. The profit after tax from Shs 66 bn to Shs 80 bn. Crane Bank is the only bank with a paid up capital of Shs 100 bn, in fact it increased its authorized capital from Shs 100 bn to Shs 210 bn.
The performance for 2012 is a clear testimony to the underlying strength of the success resulting from a strong foundation built over the years from our continued investment into infrastructure, products and people. We currently have 27 branches, which we intend to increase to 40 by end of 2013. In 2012, we opened up 12 branches; so this year we intend to open up 13 new branches.
What are the key factors that curtailed your performance in 2012?
The main factors were the non-performing loans and bad loans. Earlier on we used to have a bad loan portfolio of 0.2%, this has moved to 4.2%, although it is still below the industry average of 5.8 - 6%. This is due to the depressed economic conditions. The other factor has been that of man power and skilled human resource. Also, the new banks that have come in always want to poach on employees from existing banks. This has affected all banks.
How positive are you about the banking sector in 2013 given the prevailing economic environment?
I think the present environment is still very challenging but it looks positive going forward. BoU has managed to bring down the inflation to single digit but with the current situation the business on the part of the customers is still low. Although the outlook is bright, but I think it will be more challenging than 2012.
You at Crane Bank, what are you planning to do to overcome these challenges?
We are looking to invest more into the IT infrastructure and to increase our geographical foot print by opening new branches across the country. We are opening branches as far as Rusheere, Ibanda, Lyantonde, Tororo, Busia, Malaba, etc.
We are also building on the IT infrastructure by bringing on board mobile banking over our ATM network. Anyone will be able to withdraw mobile money on any of our ATMs. We have started our online banking as a new innovation, this is already in operation. We have almost completed our plan to open up a branch in Kigali, so soon we will be a regional bank.
Inflationary pressures have gone down to 5%, which was the target set by the Central Bank. How positive are you about this development?
Inflation is one factor but the purchasing power is very low in the population. This is because there is less business activity going on than there used to be. That is something that has to be addressed. Once business starts growing again, then you will begin to see most the pressures easing.
Also, the Central Bank has cut the CBR to 12%. What effect is this likely to have on the urgent need to reduce the cost of doing business?
Yes, actually in response all banks have brought down their lending rates of course depending on the forces of demand and supply. We are one of the banks that pay the highest rates on fixed deposits.
Where do you hope to see Crane Bank in the medium term?
We would like this as a regional bank. We are popularly known as the 'People's Bank' so we would like to have a presence from the grass roots right up to the corporate level. We would like to bring our services closer to the people rather than expect people to come looking for us. Also, we would like to see Crane Bank maintain its number one position. Within the next quarter we would like to increase our capital from Shs 100 bn to Shs 210 billion
So are you positive about his market?
Yes, I am optimistic; that's how to go forward. I would always prefer to be optimistic. Crane Bank has a range of growth opportunities and a strong platform to leverage those opportunities so as to create value for the stakeholders.
Your last word?
I would like to thank the Board of Directors for the broad vision, guidance and cooperation. I also thank our loyal customers for the support. They have helped Crane Bank to grow to serve them better. I thank Bank of Uganda and other regulatory bodies for their guidance and for ensuring that the financial sector becomes more robust.
I also thank our dedicated employees who have worked tirelessly to ensure that they produce such results. Also, they have helped to live up to our motto of, 'Serving to Grow and Growing to Serve.'