Kampala. Uganda’s banking sector registered improved performance over the last year, signalling growth and stability in the country’s financial industry.
Although this development comes at a time when there is adjustment in monetary policy due to forecasted rise in inflation and foreign exchange depreciation, the Central Bank is optimistic the trend will keep moving in a positive direction, which is healthy for the public and the economy at large.
In an interview with Daily Monitor on Wednesday, the director financial stability Bank of Uganda, Dr Charles Abuka, said: “There has been improvement in recovery of credit and quality credit, the Non-Performing Loans or Assets (NPL) declined from 5.6 per cent in December 2013 to 4.1 per cent as of December 2014.”
Dr Abuka added: “The volume of Non-Performing Assets has dropped from Shs465 billion as of December 2013 to Shs390 billion as of December 2014, signifying that bad debt in banks is declining.”
This development indicates that there is increased demand in the economy supported by increased public expenditure in development projects such as infrastructures and private sector activities in the economy.
Dr Abuka explained that private sector credit grew by 16 per cent as of February 2015, compared to policy target of 15.6 per cent for this financial year 2014/15. As the private investors demand money from banks, they channel it into various activities in different sectors of the economy.
“However, we need to watch what is going to happen with the policy change which has seen rise in Central Bank Rate to 12 per cent from 11 per cent, as a result of policy change the commercial banks have also made some adjustments in their prime lending rate,” he said.
Commercial bank branches as of December 2014, according to Dr Abuka grew to 564, up from 542 in 2014 and 495 in 2013.
Credit institution branches by December stood at 55, Microfinance Deposit taking Institutions branches had 78 branches as of end December 2014, while ATMs as of end December 2014 were 861, up from 786 in 2013.
More people are opening up Mobile Money accounts as account holders hit 18.8 million by the end of December 2014, up from 13.2 million in 2013. Mobile money agents stood at 79,000, up from 51,000 agents in December 2013.
Growth. Mobile money account holders grew faster than the traditional bank account holders, By end of December 2014, there were 5.8 million account holders in the commercial banks.