The Central Bank has allayed fears that some banks are at risk of failing due to the recent tightening of regulatory requirements, saying that currently, all regulated financial institutions are stable. Speaking at the opening of NCBA bank’s fifth branch in the country at Namanve Industrial and Business Park, Hannington Wasswa, the Director of Commercial Banking at BOU said the regulatory regime was reformed to make the industry stronger, having learned from the effects of previous shocks.
There have recently been fears that some institutions might close down or be acquired mainly due to the increase in minimum capital requirements, and stricter vetting of top management personnel of banks. Wasswa hailed NCBA Uganda for its high levels of compliance with the requirements that have seen it grow its presence and performance fast.
He encouraged the industry customers to always look out for new developments in the regulatory regime and take advantage of the financial literacy programs offered by BOU to make informed decisions to avoid making losses or consuming hazardous products.
The Bank has a presence around East Africa with a total of 141 branches and an asset base of 1.2 trillion shillings, making it one of the biggest in the region. Wasswa hailed the company’s innovativeness and ability to adapt quickly to changes in the business environment, including introducing services and products that respond to customer requirements.
However, the Group Managing Director, John Gachora, Warned that the global banking industry was operating in an increasingly hard environment, especially due to geopolitical developments and politics in some major countries.
He expressed uncertainties over the outcome of the US elections which, having featured the same candidates in a violent post-election period four years ago, could have worse effects on the economy than then. There are also oncoming elections in the UK, but the other major risks come from the persistent and potentially more explosive conflicts in Eastern Europe and the Middle East.
However, in the coming elections in East Africa, including in Uganda in two years, he expressed confidence in minimum effects on the business environment.
BoU’s Wasswa admitted that there is a risk to the business environment coming from geopolitics and well as the growing threat of cyber security, among others. He urged the banks to ensure they remain above these by continuously upgrading the operational and security systems but also to keep the customers informed of the new developments.
NCBA Uganda made a profit after tax of 28 billion shillings last year, which the Bank of Uganda and the bank’s board has hailed as commendable, being a fairly new player in Uganda. Mark Muyobo, NCBA Uganda Managing Director said they chose to open a branch in Namanve after realizing that the place, both the industrial park and the surrounding community were quite underserved.
But, he added, that the bank’s core business includes industrial banking and asset financing, which are a key aspect of the manufacturing industry. While the traditional banking hall is disappearing as digital and online banking takes over, Muyobo said theirs is a hybrid one that offers all the modern digital banking services, in addition to platforms like agency banking that give them a presence in all areas.
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