Despite the disruptions brought about by Covid-19 towards the economy, Uganda’s banking sector remained resilient to record improvement in total assets in the year to December 2020.
According to Bank of Uganda Annual Supervision Report December 2020, 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” – reads in part the statement by Bank of Uganda.
Despite the growth in total assets, the report shows that five commercial banks, albeit small by their relative asset size in the industry, were loss-making, during the year ended December 2020.
Meanwhile, lending activity also improved for the year to December 2020 as gross loans and advances increased by 12.3 percent (Shs.1.8 trillion), to Shs.16.3 trillion, which was higher than 11.8 percent growth over the period ended December 2019
“Community and social services, and transport sectors registered the largest nominal increase in loans, by Shs.738.4 billion and Shs.435.0 billion respectively. In percentage terms, loans to the community and social services sector registered the fastest growth of 140.5 percent”- the report shows.
On the other hand, mobile money operations continued to grow for the year ending December 20202.
The volumes of mobile money transactions rose significantly by 24.1 percent to 3.5 billion while the value grew by 28.2 percent to USh.93.7 trillion.
“This growth was significant in the quarter ending December 2020 as economic activity increased following continued easing of lockdown measures and as banks and the government continued to encourage the use of non-cash payments to limit the spread of COVID-19. A total of 30.7 million customers were registered for the service at the end of December 2020 of which 19.8 million customers are active”