Uganda Central Bank Says Lenders' Asset Quality Still a Concern

The asset quality of Uganda’s banking sector “remains a concern,” even as the country’s 24 commercial lenders reduced the amount of non-performing loans in the past fiscal year and were able to record higher profits, the Bank of Uganda said, Bloomberg News reported. The ratio of non-performing loans to total loans declined to 4.4 percent in the 12 months through June from 6.2 percent a year earlier, but “credit quality could be affected by indirect market risks arising from interest-rate policy expectations in advanced economies,” the central bank said in its Financial Stability report published on its website. At the macro-economic level, 2018-19 could see a build-up in risks, “especially from rising inflationary pressures driven by oil prices, and domestic risks arising from the increasing fiscal deficits and exchange rate volatility.” Total bank assets grew to 27.4 trillion shillings ($7.3 billion) from 24.8 trillion, “driven mainly by a pickup in lending, investment in government securities and placements with non-resident financial institutions.” Read more