HARVEST IS GOOD! Banks post Shs40Trn asset growth despite Covid pandemic

As Ugandans sink into poverty due to Covid shocks, banks are all smiles

By Prisca Wanyenya


The outbreak of the Covid-19 pandemic and its disastrous effects on the global economy hasn’t stopped commercial banks in Uganda from registering growth, with Bank of Uganda revealing that assets for commercial banks grew to almost Shs40Trn.


The details are contained in the Annual Report of Bank of Uganda 2021 that was recently released indicating that despite the challenging operating environment due to the pandemic, the commercial banks continued to register growth in assets with aggregate banks’ total assets increasing by 11.0% from Shs35.8Trn in June 2020 to Shs39.8Trn in June 2021.


Central Bank Governor, Emmanuel Mutebile, in the report, attributed the growth of assets during 2021 mainly to the account of banks’ holding of government’s securities which rose by 32.9% about Shs2.5Trn to Shs10.2Trn and gross loans and advances that increased by Shs1.1Trn to Shs16.6Trn.


Mutebile also revealed that customer deposits in commercial banks also rose by 8.7 percent from Shs25.5 trillion to Shs27.7Trn as of June 2021.


The Governor also didn’t fall short of bragging about how the policies set up by Bank of Uganda helped commercial banks salvage growth in their assets, adding that the sector maintained strong capital and liquidity buffers.


Mutebile wrote: “Overall, the asset quality of the commercial banking sector improved over the year ended June 2021, though it should be noted that the Bank of Uganda credit relief measures have moderated potential deterioration in asset quality.”


According to the Central Bank, the aggregate commercial banks’ ratio of non-performing loans to gross loans reduced from 6% to 4.8% as the stock of non-performing loans decreased to Shs793Bn from Shs931.8Bn as of June 2021.

Although the Central Bank noted that overall, the banking sector remains resilient to the COVD19 pandemic and most banks have strong capital and liquidity buffers to absorb the shock, the sector is yet to record stability until economic recovery returns to any form of normalcy.

“The operating environment for the banking sector remains challenging until economic recovery is stronger. The main downward risk to the banking sector stability include uncertainty about the path of economic recovery , with the disruptive resurgence of the pandemic which is expected to increase credit risk and the potential rise to non-performing loans,” read in part the report.


During the year, the Central Bank is said to have conducted some on-set examinations of supervised financial institutions (SFIs) and unlike the earlier years where the inspections were onsite, this time around the Central Bank conducted virtual inspections with the Board and Management of Supervised Financial institutions.




Bank of Uganda also revealed that in 2021 the value of Mobile Money transactions increased by 42.26 percent to Shs113.38Trn from Shs79.7 trillion, while the volume of transactions increased by Shs730M to Shs3.89Bn. The upward trend was attributed to the increased usage of the mobile money digital platform to mitigate the COVID19 risks associated with handling paper money.


The growth was further complemented by the growth in the number of active mobile money users that increased to 21.18 million during the year under review when compared to 17.5 million recorded during the year 2020.


Following the enactment of the National Payment Systems Act 2020, it the first time Bank of Uganda has a legal instrument upon which it is regulating mobile money, since the inception in 2009 and currently, the Central Bank has licensed MTN Uganda Limited and Airtel Uganda Limited to operate mobile money services after closure of business by Africell.


Bank of Uganda informed all Customers of Africell to go and reclaim their funds from Stanbic Bank within three months and after the period elapses, the money will revert back to the Central Bank, where customers who fail to beat this deadline would make claim of their funds through Bank of Uganda.

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