Uganda Banking Sector

I have been following the Ugandan banking sector & though there are structural challenges, it seems there are ripe pickings - even better than Kenya but beware currency movements.

Uganda will start 'producing' oil - primarily sour, heavy & waxy (the lowest quality!) - in 2010.
Ugandans should not expect 'cheap' petrol but it will definitely help reducing the cost of heavy diesel for Ugandan industry & energy production. There are plans to build a refinery as well. Maybe even export the products to S.Sudan, Rwanda & DRC.

Since oil production has been 'privatised' I expect production to start more or less on schedule. I do not know the break-even cost for this oil BUT Uganda will have an additional source of energy except hydro at Jinja.

The Bujangali Dam being built by/under AKFED will also boost Uganda's economy. I like AKFED. They do good work in African countries by building capacity. AKFED firms include Diamond Trust, Jubilee, Nation Media & TPSEA.

KES 1 = UGX 25
USD 1 = UGX 1990

Here's a look at listed banks

Bank of Baroda (Uganda) - Unlike BoB(Kenya), they are public (20% float). They even released unaudited 2008 numbers by 16 Jan 2009. Imagine that! Anyway, they last traded at UGX 405. The 2008 EPS estimated at 37. Very conservative bank thus low NPAs & great ratios for capital adequacy. Also owns prime property in the middle of Kampala's CBD. Low 2008 PE = 11. They have never had an unprofitable year since they listed.

DFCU - Controlled by Actis (former CDC). New CEO appointed in 2008. Major scandal & losses hit DFCU in 2007. Trying to be the Equity Bank of Uganda.

Equity Bank (parent listed in Kenya)- Purchased UML with 30 branches. Rebranding to EBL. It will shake up the sector. Competitors are already on edge!

KCB (cross-listed) - They came in the market with a bang but concentration seems on cross-border business.

Stanbic Uganda - Huge over-subscription during the IPO thanks to Kenyans. Seems priced well on a P/E basis but not as entrepreneurial as DFCU nor conservative as BoBU nor aggressive as DTB. Controls a huge chunk of the market thanks to its purchase of Uganda Commercial Bank - Uganda's then largest bank. Expect severe competition from DFCU & Equity Bank for the mass market. Corporate & SME business under threat from DTB & Crane Bank. Cross-border business under pressure from DTB & KCB. Standard Chartered & Barclays (bought out Nile Bank) are also in the market.

Diamond Trust Bank (parent listed in Kenya) - SME market & aggressive. AKFED investments in Uganda will boost DTB's profile. Also aims for the corporate market.

Conclusion: Get in before its too late!