Centenary Bank Annual Report 2012 ANNUAL REPORT 2012 1 CENTENARY BANK WAS VOTED AS THE BEST BANK IN THE TOP FIFTY BRANDS IN UGANDA BY THE PUBLIC 2012 ANNUAL REPORT & FINANCIAL STATEMENTS Centenary Bank Annual Report 2012 CONTENTS VISION, MISSION, STRATEGY AND OWNERSHIP 5 BOARD OF DIRECTORS 8 CORPORATE GOVERNANCE 12 PERFORMANCE AGAINST FINANCIAL OBJECTIVES 19 FINANCIAL HIGHLIGHTS 20 OPERATIONAL AND FINANCIAL REVIEW 21 DIRECTORS` REPORT 30 DIRECTORS` RESPONSIBILITY FOR FINANCIAL REPORTING 32 CHAIRMAN`S STATEMENT 33 REPORT OF INDEPENDENT AUDITORS 35 FINANCIAL STATEMENTS 37 SUSTAINABILITY REPORT 100 BANK CONTACT INFORMATION 122 EXECUTIVE MANAGEMENT 123 BRANCH NETWORK 125 4 Centenary Bank Annual Report 2012 1. VISION, MISSION AND STRATEGY Our Vision: “To be the best provider of Financial Services, especially Microfinance in Uganda.” Our Mission Statement: “To provide appropriate financial services especially microfinance to all people in Uganda, particularly in rural areas, in a sustainable manner and in accordance with the law.” Our Values • Superior customer service • Integrity • Teamwork • Professionalism • Leadership • Excellence • Competence 5 Centenary Bank Annual Report 2012 Strategy Centenary Bank has continued its growth in terms of profitability and total assets. This has been realized through its continued focus on provision of microfinance. The provision of Micro finance has been and will remain the focus of Centenary Bank. However, to reduce business risks, the Bank has diversified her activities to include lending to small and medium enterprises and large corporations to reach the middle and higher-end markets in order to pro- vide services to sectors that are complimentary to its target market and customers. The Bank put in place the infrastructure to promote efficiency and improve customer service. In the Bank’s con- tinued quest to provide superior customer service, Centenary Bank set up a state of the art channel manager to enhance electronic Banking products like CenteMobile. In the period under review, the Bank opened a number of new delivery channels to bring services near to the customers. Mapeera House, the new Headquarters of the Bank was officially opened on 10th June 2012 and this has improved the brand visibility of the Bank. Some of the customers are served at the Platinum wing of Mapeera House and Lugogo Branch. The Bank continues to improve on customer service through business process re-engineering and a robust business continuity plan. In order to protect the customers, the Anti Fraud Campaign was rolled out. In the period under review the bank continued to grow its deposits and loan base through various campaigns. The Bank continues to participate in the Government’s poverty alleviation programmes and help improve the living conditions of the rural poor through loan products such as Home Improvement Loans and Salary Loans as well as through various savings schemes to promote the saving culture. The Bank will continue to find ways to serve rural customers in a better and more efficient manner and will also continue to strive to reinforce its number one posi- tion in rural banking. During the year, Centenary Bank invested in e-learning to facilitate easier and faster staff learning and development. There is an increasing cohesion of staff through Centefusion and communications through an electronic information SharePoint that is available all the time to all staff. With more delivery channels spread across Uganda and with a robust banking network, the Bank is determined and well placed to achieve its dream of being “the Bank for all Ugandans” Outlook for the Year 2013 and beyond The bank anticipates a stable macroeconomic environment. Inflation is forecast to remain under control due to expected favorable conditions. The exchange rates are expected to be more stable due to increasing efforts by government to encourage export of more goods and services. The bank plans to achieve operational excellence by optimizing the allocation of the bank`s scarce human and financial resources through improved efficiencies. The bank plans to optimize costs in order to achieve better cost income ratio and to simplify and refine processes for better turnaround time. The bank expects to increase its revenue through the growth of non-funded income and its loan base by a combination of increased deposit growth and external borrowing. Going forward, the bank is determined to improve customer satisfaction through customer segmentation and improved service delivery and new products. The bank aims to increase its market share especially in the micro finance sector through linkage banking initiatives and strategic partnerships. The bank will continue to empower its employees to drive the bank`s business through training, better employee relationship programmes, effective methods of internal communication and the development of a culture of execu- tion and accountability. The bank is set to renew its core banking software as well as deliver an efficient IT platform for its customer service. 6 Centenary Bank Annual Report 2012 Ownership The Catholic Dioceses of Uganda 38.5% The Uganda Catholic Secretariat 31.3% SIDI 11.6% Stichting Hivos-Triodos Fonds 18.3% Individuals 0.3% Total 100% 18.3% 0.3% 38.5% Cathiolic Dioceses Uganda Catholic Secretariat SIDI 11.6% Stichting Hivos-Triodos Individuals 31.3% Shareholders: • The Catholic Dioceses, which are all independent legal personalities as Registered Trusteeships, are: Arua, Fort Portal, Gulu, Hoima, Jinja, Kabale, Kasana-Luwero, Lugazi, Kampala, Kasese, Kotido, Lira, Masaka, Mba- rara, Mityana, Moroto, Nebbi, Soroti, and Tororo. • The Uganda Catholic Secretariat. • SIDI-Solidarite’ Internationale pour le Development et l’Investissement (International Solidarity for Develop- ment and Investment) based in France. • STICHTING HIVOS-TRIODOS FONDS. An investment fund, specializing in investing in microfinance and trade finance, managed by Triodos Investment Management in the Netherlands. • Individual shareholders (4 individuals). 7 Centenary Bank Annual Report 2012 2. THE BOARD OF DIRECTORS Prof. John Ddumba Ssentamu Mr. Fabian Kasi Dr. Simon M. S. Kagugube Board Chairman Managing Director Executive Director Mr. Kimanthi Mutua - Member Mr. Jacco Minnaar - Member Mt. Rev. Paul Bakyenga (Chairman Risk Committee) (Chairman ALCO Committee) Member Mt. Rev. Dr. Cyprian K. Lwanga Dr. Peter Ngategize - Member Mr. Henry Kibirige - Member Member (Chairman Credit Committee) (Chairman Audit Committee) Mr. Rene Ehrmann Mr. Andrew Obol- Member Member (Chairman Compensation & Human Resources Committee) 8 Centenary Bank Annual Report 2012 THE EXECUTIVE MANAGEMENT Mr. Fabian Kasi Dr. Simon M. S. Kagugube Mrs. Peninnah Kasule Managing Director Executive Director Company Secretary Mrs. Florence Mawejje Mr. Joseph Kimbowa Mr. Joseph Lutwama General Manager - Human Resources General Manager - Operations General Manager - Credit Mr. Edward Kitimbo Mugwanya Mr. George K. Thogo Mrs. Beatrice Lugalambi General Manager - Finance General Manager - Business General Manager - Business (Retired on 31st March 2013) Technology Development & Marketing Mr. Godfrey Bwekwaso Mr. Denis Echeru Mr. Micheal Nyago General Manager - Finance General Manager - Risk General Manager - Audit (Joined on 12th December 2012) Management & Compliance 9 Centenary Bank Annual Report 2012 BOARD OF DIRECTORS The Directors who held office during the year were as follows: - Prof. John Ddumba Ssentamu - Board Chairman Mr. Fabian Kasi - Managing Director Dr. Simon M.S. Kagugube - Executive Director Mr. Jacco Minnaar - Member (Chairman ALCO Committee) Mr. Kimanthi Mutua - Member (Chairman Risk Committee) D r. Pe t e r N g a t e g i z e - M e m b e r ( C h a i r m a n C r e d i t C o m m i t t e e ) Mr. Henry Kibirige - Member (Chairman Audit Committee) Mr. Andrew Obol - Member (Chairman Compensation and Human Resources Committee) Mt. Rev. Dr. Cyprian K. Lwanga - Member Mt. Rev. Paul Bakyenga - Member Mr. Rene Ehrmann - Member 10 CENTENARY BANK WON THE FINANCIAL REPORTING SILVER AWARD IN UGANDA FOR THE YEAR 2011 Centenary Bank Annual Report 2012 3. CORPORATE GOVERNANCE Centenary Bank views the implementation of best corporate governance practices as a fundamental characteristic of its operations. The Board of Directors is therefore committed to the consideration and implementation of initiatives to improve corporate governance for the benefit of all stakeholders. Good corporate governance seeks to protect stakeholders’ interests by balancing entrepreneurial lead- ership with transparency and control mechanisms, without compromising value creation and efficient decision-making. The Bank endeavors to establish and maintain leading governance and risk manage- ment systems and practices. The Bank’s risk management function is responsible for identifying and understanding the different types of risks faced, internally and externally, locally and internationally and for measuring and managing them accordingly through established and emerging risk management methodologies. The Bank has a clearly identified enterprise risk management framework that emanates from the sound governance principles maintained at board levels, both at head office and through the various functional structures. The risk objectives are integrated and aligned with the Bank’s wider business development and management objectives. Codes and Regulations The Bank operates in a highly regulated industry and is committed to complying with legislation, regula- tion, codes and guidelines