Banks are closing branches and ATMs as digital channels take over
Commercial banks closed 14 branches and 14 automated teller machines (ATMs) in 2020, the recently released Annual Supervision Report by Bank of Uganda (BoU) has revealed.
“Bank branches and Automated Teller Machines The total number of bank branches decreased from 580 in 2019 to 566 in 2020,” the report obtained by Business Focus reveals.
It adds: “Similarly the total number of automated teller machines (ATMs) operated by Commercial Banks decreased from 851 in 2019 to 837 in 2020. This decrease was attributed to closure of branches by banks. Increased preference to digital channels such as Internet Banking, Mobile Banking, Mobile Money and Agent Banking was overserved during the year.”
The report adds that the emergence of the COVID-19 pandemic during the year ended December 2020 and the necessary measures to contain it posed an unprecedented shock to the banking sector, heightening risks to financial sector stability.
“Nevertheless, the banking sector remained resilient, supported by strong capital and liquidity buffers as well as BOU policy measures,” the report reads in part.
Over the year to December 2020, the report says total assets of the banking sector grew by 16.8 percent (Shs.5.5 trillion) from Shs.32.8 trillion in December 2019 to Shs.38.3 trillion in December 2020.
“This growth rate was slightly higher than the 16.7 percent growth registered in the year ended December 2019. This was largely on account of an increase in holdings of government securities which rose by 39.9 percent (Shs.2.9 trillion) to Shs.10.1 trillion, gross loans and advances by 12.3 percent (Shs.1.8 trillion) to Shs.16.3 trillion, and balances with banks abroad which increased by 22.6 percent (Shs.0.59 trillion) to Shs.3.19 trillion,” the report says.
Furthermore, it adds, during 2020, banks increased the investment in liquid and less risky assets i.e. government securities and cash balances in comparison to loans and advances to the private sector.
“Hence, the holding of government securities as a proportion of total assets increased from 21.97 percent to 26.29 percent, while the ratio of gross loans and advances to total assets reduced from 44.04 percent to 42.51 percent over the year to December 2020,” the report says.
