Ugandan banks make over Shs1 trillion profit in 2021 despite Covid blues

Ugandan commercial banks made profits of Shs1.073 trillion in 2021 despite the economic downturn over Covid-19, a new report shows.

According to Bank of Uganda Annual Supervision report, the Shs1.073 trillion meant a 26.9 percent increase from Shs846.2b that was recorded in 2020.

However, the ratio of non-performing loans was largely unchanged between 2020 and 2021 at 5.27 percent and 5.26 percent, respectively.

Dr Michael Atingi-Ego, the Bank of Uganda deputy governor, indicated that the growth was largely driven by an increase of 24.4 percent and 7.9 percent in interest income from government securities and loans, respectively.

Dr Ego noted that financial stability remains elevated and resilient to potential shocks caused by the global price hikes.

Bank of Uganda also noted that supervised financial institutions during the period continued to hold strong liquidity buffers, supported by growth in deposits and holdings of government securities.

For instance, commercial banks’ aggregate liquidity coverage ratio, which measures the ability of a financial institution to withstand a 30-day liquidity stress, increased from 229.6 percent to 251.2 percent, underlining the sector’s strong resilience.

The Central Bank report indicates that in 2021, lending and credit continued to recover but remained moderate. Total loans advanced by supervised financial institution grew by 6.3 percent to Shs18.4 trillion compared to the 12.6 percent growth over the period.

Commercial banks registered the strongest growth in credit, increasing by 8.8 percent to Shs17.7 trillion.