Dr. Tumubweine Twinemanzi, the Executive Director, Supervision at BoU
Uganda’s banking sector performed better in 2023 compared to 2022 as the economy continues to recover from the COVID-19 impact.
According to Uganda Bureau of Statistics, GDP grew by 5.2% in FY 2022/23, from 4.6% in FY 2021/22.
Bank of Uganda (BoU) projects growth at 6.0% in FY 2023/24 and 6.5% in FY 2024/25.
Dr. Tumubweine Twinemanzi, the Executive Director, Supervision at BoU, says the aggregate banking sector assets increased by 9.3% to Shs51.3 trillion in December 2023, up from Shs46.9 trillion in December 2022.
He adds that banks’ customer deposits grew to Shs34.7 trillion in December 2023, up from ShsShs31.53 trillion in 2022.
“Total Supervised Financial Institutions’ loans grew by 7.8% (Shs1.54 trillion) in the year to December 2023, higher than the 5.4% in the year to September 2023, however, lower than the 8.6% growth in December 2022,” Twinemanzi said.
He was speaking at the 3rd BoU Financial Stability Symposium held at Serena Hotel on February 13, 2024.
BoU says SFIs’ profitability improved during the year.
“The aggregate net profit-after-tax increased by 23.9% to Shs1.50 trillion for the year 2023 from Shs1.21 trillion in 2022,” Twinemanzi said.
He however, notes that profitability was largely driven by the largest banks.
“The aggregate industry Return on Assets (ROA) improved from 2.75% in 2022 to 3.19% in 2023,” he said.
He added that the aggregate banking sector ratio of non-performing loans-to-gross loans (NPL ratio) reduced to 4.7% in December 2023, from 5.4% in September 2023 and 5.3% in December 2022.
“Reduction in NPLs partly reflects recovery on bad loans and prudent write-offs,” Twinemanzi says, adding that the improvement in asset quality (reduction in NPLs) is expected to further encourage banks to increase credit extension to the private sector, going forward.
He notes that BoU continues to engage Supervised Financial Institutions (SFIs) to enforce credit risk management and mobilization of adequate capital buffers to absorb potential shocks.
Outlook
BoU says the improving global and domestic economic growth and financial conditions are expected to support financial positions of households, firms and government, leading to better banking sector performance.
“Recovery in economic growth and relative stability in financial markets is expected to further improve liquidity and funding conditions for banking institutions,” BoU says.
