The country’s economic performance was challenged having receded by 1.2% in 2020 marred with pessimism within the business community much in line with previous sentiments. The Central Bank projects a GDP growth of 3 – 4% for the financial year 2020/21 only recovering to 5 – 6% in 2021/22 driven by resumption in domestic and foreign demand bolstered by optimism associated with the COVID-19 vaccine development complemented by fiscal and monetary policy actions. Inflation projections range between 5 – 6% in 2020/21 which is fairly within monetary policy targets while the fiscal deficit is projected to widen to close to near the East African Monetary Union threshold of 50% by end of the financial year 2020/21.
In 2020, the Bank’s customer deposits enjoyed a 7% growth, while customer loans and advances largely remained subdued. However, investment in government paper grew by 54% as the Bank took steps to de-risk its balance sheet. Because the banking activity was negatively impacted, profitability also suffered characterised by a 4% decline in income. The 6% cost savings over prior year notwithstanding, an increase in impairment costs on account of proactive credit loss provisioning resulted into a 34% decline in net profit between 2019 and 2020.
Despite the turbulent business environment on account of the COVID-19 pandemic, the Bank enjoyed significant leaps in optimization of alternative customer channels, with more than 80% of the bank transactions being conducted outside the brick and motor Branch. Along with the specific sector focus, risk management and efficiencies, the Banks goals are set on growth to achieve improved profitability in 2021.