Ugandan commercial banks are better debt-payers according financial sector stability report published by Bank of Uganda with the country’s non-performing loans being four per cent of the total loans compared to Kenya’s 5.3 per cent. Burundi has the highest default rate of 10.1 per cent, followed by Tanzania’s 8.1 per cent and Rwanda’s 6.9 per cent.
Rwanda’s banks returned 9.9 per cent to their shareholders while Burundi’s was the lowest at five per cent.
Uganda’s industry recorded higher average return on assets, 4.7 per cent, than Kenya’s 3.9 per cent, which was attributed to higher interest rates charged on loans whereas in the nine months to September the Kenyan lenders posted a 14.5 per cent increase in profits to record Ksh92.5 billion putting it on course to surpassing the 2012 full-year record profit of Ksh107.8 billion.
Ugandan banks use an average of 72.4 per cent of their income to meet operational costs compared to Kenya’s 51 per cent which allows Kenyan lenders to record higher returns to investors.