dfcu - Norfund

Report
dfcu Bank’s experience in developing and
growing a successful SME Bank
Norfund Summer Conference
Oslo, Norway
By: Juma Kisaame
Managing Director, dfcu Bank
Thursday, 28th August 2014
Facts about Uganda
Land linked country of : 241,038 sq. km.
Member of the East African Community, COMESA.
Demographics:
 Population: approx. 37m, with 60% below 22 years.
 Urbanization at 16%, with over 75% engaged in Agric.
 Potential spending power – growing Middle class
Stable macro economics policies/ liberalization.
Economic growth: 5.2% (FY13) and est. at 5.5% (FY 14).
Strong capital inflow; FY12 FDI: $ 1.2bn, high return.
Massive resource concentration:
 Mineral deposits
 Oil & gas – over 3.5 billion barrels.
 Tourist attractions– natural, cultural sites.
Comparative advantage in Agriculture.
Overview of Uganda’s Banking Sector
25 licensed commercial banks, 3 Microfinance deposit taking institutions
(MDIs), and thousands of Microfinance Institutions/SACCOs.
Commercial banks, MFIs and MDIs are regulated by the Bank of Uganda
Strong regulatory environment (FIA 2004)
Approx. 54% of the adult population have access to financial services, of
which only 23% use formally regulated financial institutions.
Stiff competition within and emergency of mobile money transfer services:
of the adult population, 31% use MM services vs. 23% using formal FIs..
Shortage of long term funding for development projects.
Nascent financial/capital markets.
Source: Uganda 2013 FinScope III report, Bank of Uganda
Key themes shaping the Banking sector
Financial inclusion: Outreach / financial
literacy.
Innovation: Product differentiation &
diversification.
Demographics and growing affluence
Digital revolution – convergence of
banking and mobile money transfer
services, internet banking, etc.
Tightening regulatory framework.
Agency banking ??
A dfcu customer checks her bank account
transactions using mobile banking
dfcu - Who we are
Vision
To be the preferred Ugandan financial
institution providing a broad range of
quality products to our chosen customer
segments.
Mission statement
To grow shareholder value while playing a
key role in transforming the economy and
enhancing the well-being of our people.
Evolution of dfcu
1964
1974-85
1995-99
2000
2004
2008
2013
Development Finance Company of Uganda (dfcu Limited) was
started by the CDC, IFC, DEG & GOU to provide long term
financing and Equity to SMEs.
Lost decade, scaled down operations to 2 clerical staff.
Diversification into Leasing, Property Development and mortgage
financing.
dfcu Limited acquired Gold Trust Bank, thus extending the services
of the Group to include Commercial banking.
dfcu Limited was listed on the Uganda Stock Exchange. NORFUND
acquired 10% stake in company.
Integrated Development Finance the dfcu Bank to create a ‘one stop
shop’.
Shareholder realignment results in Rabo Bank and NORFUND acquiring stakes
in DFCU Limited of 27.5% each. ACTIS down to 15%
dfcu Ltd ownership at 31 December 2013
Mr. Kjell Roland of NORFUND receives a dummy certificate
from the Uganda Minister of Finance confirming the
increment of stake in dfcu Limited to 27.5%
Board of Directors
Corporate Governance Structure
A&L Committee
Risk & credit
Committee
Remunerations
Committee
Audit Committee
Risk
PMO/strategy
Credit
DIB &
Trade
Finance
Legal/ Co. Sec
Finance
The Business
Internal
Audit
Consumer
Banking
Marketing &
Service
Treasury
Operations
& IT
Human
Resources
dfcu at a glance
Over 50 years in business.
USD 550 m in total assets
Over 300,000 customers.
Built Own Head Office.
Focus on Retail and SME
segments.
43 branches (48 by y/e 2014).
Mobile and internet banking
solutions.
Over 800 dedicated staff.
Wide range of products:
“One-stop shop”
Funding Mix
Equity
EIB
KFW
DEG
IFC
Savings
Customer
deposits
Lines of
credit
FMO
Norfund
Proparco
Demand
deposits
Fixed
deposits
Our product offering – Assets & Services
Retail
Personal loans
Home loans
Overdrafts
Bus. Growth
Loans
Corporate
Commercial
loans
Term finance
Commercial
mortgages
Commercial
leases
Banking services
Funds transfer
Agency
Women in
Business program
Overdrafts
Bridge financing
Trade finance
Agri-business
dfcu Women in Business
training
Treasury services
Interbank lending
T-bills & bonds
FX trading
Focus sectors
Agribusiness
Education
Manufacturing
Kampala University
A production line at Wavah
mineral water Plant
The new Igara Tea Factory
Focus sectors
Trade & commerce
Transport
Tourism
Real estate
Infrastructure development
Oil & gas
Brovad Hotel
A rural road being upgraded by
Spider Construction Company
Quality Shopping mall
Challenges
Internal
High funding cost – external debt.
High cost of operation.
Skills gap.
Low customer base.
External
Low levels of financial literacy.
Climate change and environmental challenges.
Regional instability.
Poor infrastructure, especially in the rural areas.
Competitive environment.
Effects of the global uncertainty – Euro zone crisis
Low levels of income and lack of collateral
Opportunities for growth
Oil and Gas investments – US$
10b?
Agribusiness potential.
Manufacturing and service
industries.
Population demographics and
urbanization.
Infrastructure – rail, energy,
roads…
ICT penetration/evolution.
Financial Inclusion.
Regional integration
Business Focus 2014/18
Build a robust Retail Operation with multiple
distribution channels - (1.2 million customers).
Consolidate our position as key provider of long term
funding to the SME market segment.
Become the leading Bank for Agribusiness
In pursuit of Financial inclusion
Build a robust retail operation with multiple distribution
channels. Target: 1.2m customers by 2018.
Provision of long term financing to SMEs.
Enhancement of Risk management processes.
Consolidation of activities in the new Head Office.
Collaboration with mobile operators and roll out agency
banking.
Launched Quantum Leap Project in 2014 to drive efficiency
•
Business process re-engineering.
•
Internal capacity building.
•
Product innovation / market segmentation.
•
Agri-business value chain analysis.
dfcu Performance Trends 2008-2013
Shareholders Funds (UGX Billions)
2013
63
2008
Customer Deposits (UGX Billions)
2013
704
2012
591
2011
525
2010
2008
481
347
255
802
2009
77
2009
954
2010
91
2009
1,001
2011
114
2010
1,230
2012
136
2011
2008
2013
161
2012
Total Assets (UGX Billions)
612
496
Loans & Advances (UGX Billions)
2013
624
2012
555
2011
496
2010
2009
2008
(Euro 1 = UGX 3,525)
397
326
283
Microfinance : Hattha Kaksekar Limited, Cambodia
(HKL)
Company Background
Shareholding Structure
 Started as an NGO food project in 1994 and a
17.49%
Microfinance operator in 2001.
19.75%
19.73%
 Norfund has been invested since 2007.
23.16%
19.87%
 Is among one of the top 4 MFIs in Cambodia and is
Local
SH
moving towards being the leading, sustainable
microfinance provider, helping clients to succeed in
their businesses.
 Employs 1872 people, of which 541 are female.
 We have provided equity funding, loans in both local
currency and in US dollar and an emergency liquidity
Strong shareholder group who have been consistently supportive to HKL’s
growth.
Performance - Loan portfolio
Unit: USD million
250
200
credit line, when there was political turmoil.
 Strategic plan initiated to transform to a fully fledged
SME/ Micro finance banking group.
150
100
50
0
2007
2008
2009
2010
2011
2012
As of June 2014, loan portfolio stood at USD 194 million
with PAR>30 of only 0,04%.
2013
1H 2014

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