Customer deposits, which constitute the largest source of funding for banks, increased over the year ended December 2020 despite economic slowdown over Covid-19.
According to Bank of Uganda Annual Supervision Report for 2020, customer deposits increased by 17.1 percent from Shs.22.9 trillion to Shs.26.8 trillion over the year ended December 2020.
The growth is slightly higher than the growth of 16.7 percent in 2019.
According to the report, the growth in customer deposits was mostly driven by shilling deposits, which increased by 19.9 percent to Shs.17.2 trillion, while foreign currency deposits rose by 12.3 percent to Shs.9.6 trillion. As a share of the total deposits, demand deposits accounted for 56.6 percent, time deposits 22.2 percent, and savings deposits 21.3 percent.
Currently, there are 25 banks operating in Uganda; Stanbic Bank Uganda leads with the biggest customer deposits. Stanbic’s customer deposits increased by 16.31% to Shs5.49 trillion in 2020, up from Shs4.72 trillion recorded a year earlier. This gives the bank a commanding industry market share of 20.77% under customer deposits category.
According to the report, wholesale interbank funding conditions improved, as shown by the reduction in interbank interest rates, spreads, and volatility of interbank funding.
“The quarterly average spread between 7-day interbank rate and the Central Bank Rate (CBR) reduced further from 0.66 percent in June 2020 to 0.32 percent in September 2020 and to 0.39 percent in December 2020. Similarly, the quarterly average spread between the 7-day swap implied rate and the CBR declined from 3.19 percent in June 2020 to less than 1.0 percent in September 2020 and December 2020,” the report reads in part.