intergrated risk mgt abdul kyanika nsibambi centenary bank uganda 2 nd april 2009
TRANSCRIPT
INTERGRATED RISK MGT
ABDUL KYANIKA NSIBAMBICENTENARY BANK UGANDA
2nd April 2009
Location
Mission Statement
“To provide appropriate financial services, especially microfinance, to all people of Uganda, particularly in rural areas, in a sustainable manner and in accordance with the law”
Centenary Bank – HistoryFirst Years ( 1982 – 1993)
1983 – Formed as a Credit Trust with the name “ Centenary Rural Development Trust”, by the Uganda National Lay Apostolate,
1985 – Began providing financial services 1993 – Registered as a Commercial Bank
with only 8 branches,
Centenary Bank Ownership
Uganda Catholic Secretariat
31%
Stichting HIVOS – Triodos Fonds
18%
Catholic Diocese38%
SiDi12%
Individuals1%
CENTENARY BANK TO DATE
One of the fastest growing Commercial Banks in Uganda – over 700,000 depositors and over 90,000 borrowers
Pioneered Microfinance in the Banking sector, serving mainly Micro and SME’s
Actively involved in Agricultural lending, the backbone of Uganda’s economy
Large branch network with 32 branches networked countrywide, 52 ATMs and employing over 1,300 staff
Centenary Bank – Branch Network
Centenary Bank – Loan PortfolioAs at 31st December 2008
Loan Clients 92,611 Volume is $ 144,000,000 funded
by a deposit base of $ 172,272,000 74% of the LP are micro loans, with
minimum loan amount of $ 50 NP Loans = 1.5%, The Agricultural LP is 13% – 14% of
the Total LP,
PERFOMANCE FOR THE LAST SEVEN YEARS
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2002 2003 2004 2005 2006 2007 2008
Gross Loans Total Income Deposits Total Assets
Agricultural LP Growth.
Proposed H/q OF THE BANK
Why Agricultural Lending? The mission statement of the bank is to
extend financial services to rural economically active poor,
80% of Ugandan population stay in rural areas and main activity is Agriculture.
Uganda has conducive climate for agricultural production and fertile soils,
The national economy is entirely dependent on agriculture,
There is increased demand of agricultural commodities in the region,
Agricultural Lending – History
Started in 1998 as a pilot test targeting small farm holder farmers
Focus was mainly on commercially oriented farmers located in rich agricultural regions,
Agricultural Enterprises Financed
Crop/animal production, processing & marketing,
Crops financed: maize, vegetables, rice, coffee, bananas, oilseed crops
Animal production including cattle fattening, and dairy production, poultry, and piggery,
Risks in Agricultural Lending
Purely dependent on nature, Crop and animal diseases and pests, Market & price risks, Poor loan management by credit officers
and institutions in the following areas;loan evaluation,Structuring,Documentation,Monitoring,Recovery.
Risks in Agricultural Lending Cont’d…..
Perishability of the agriculture produce,
Loan Collateral Limitations, Poor Credit Culture in some parts of
the country, Lack of entrepreneur skills by
farmers, Bad policies and Instability.
Risk Mitigation Measures by the Bank, Focus on commercially oriented farmers, Holistic approach in credit appraisal by
considering all sources of income of the household,
Combination of securities/collateral approach,
Using well trained credit officers with a background of agricultural academic qualifications,
Risk Mitigation Cont’d……..
Quick and timely loan processing Proper structuring of loan payments
depending on the farmers cash flows,
Diversification of the agricultural portfolio,
Using an efficient back office credit mgt system to monitor the portfolio growth and quality,
Risk Mitigation Cont’d……..
Networking with other partners in the agribusiness industry which include farmers’ association, government, processors, NGOs, FIs.
Increasing outreach by coming up with new products, opening more branches and lending offices,
Challenges of Agricultural Lending
Lack of credit history, Lack of farm records, Heterogeneity of farming, Seasonality of agricultural
production & Loan Term Structure. Clients are widely dispersed with
inadequate rural transportation facilities,
Challenges ctn’d Poor physical and institutional
infrastructure, Lack of production statistics from
the farmers,
End
LOVE SERVE AND UNITE
Thanks for Listening