Uganda: Non-performing loans up 1.2 per cent

Mar 10, 2016

The NPL ratio increased to 5.3 per cent in 2015 from 4.1 per cent recorded in 2014.

The number of non-performing loans (NPLs) in Ugandan banks has risen by 1.2 per cent in 2015, according to new figures from the Bank of Uganda (BoU).

"For the period ending December 2015, the NPL ratio increased slightly to 5.3 per cent from the level of 4.1 per cent recorded in December 2014. While there has been a slight increase, this is still a good level of asset quality by international standards," Charles Abuka, BoU's director of financial stability, told The Daily Monitor.

Experts in the country believe that high bank lending rates are responsible for this increase in NPLS. Commercial interest rates now range in excess of 25 per cent per annum.

The ratio of liquid assets to total deposits was 46.4 per cent, well above the minimum requirement of 20 per cent.

Charles Abuka said that Ugandan banks continued to be profitable throughout 2015, adding that the Ugandan financial sector is "resilient to shocks" and is "adequately capitalised".

The Ugandan Parliament recently adopted the Financial Institutions Bill 2015, which introduces amendments to the Financial Institutions Act that pave the way for the development of Islamic finance, bancassurance and agent banking in the country.

Uganda's eleven commercial banks are now able to provide Islamic banking products. Around four million people in Uganda declare themselves Muslim, out of a total population of 33 million.

Only 8.3 per cent of the country's population owns a bank account, according to figures from the Central Bank.ADNFCR-2976-ID-801814355-ADNFCR