Personal loans top list as credit approvals by banks increase

The value of credit approved by financial institutions in Uganda for disbursement in September 2023 amounted to Shs1.090.3 trillion, the latest statistics show.

According to the Performance of the Economy Report for October 2023, this was a Shs3.1 billion increase from Shs 1,087.2 trillion the previous month of August.

This represents an approval rate of 53.4% in comparison to the rate of 64.7% in August 2023, partly due to higher risk averseness by commercial banks following the rise in provisioning for bad debts, the report adds.

In September 2023, personal and household loans accounted for the largest share of credit approved at 30.4% (Shs 331.3 billion). Other notable recipients of credit included trade at Shs. 224.4 billion (20.6%), building, mortgage, construction and real estate at Shs. 165.8 billion (15.2%), business, community, social and other services at Shs 147.6 billion (13.5%), and agriculture at Shs. 115.8 billion (10.6%).

“These five sectors constituted 90.3% of all the credit extended to the private sector during the month,” the report adds.

The stock of total outstanding Private Sector Credit grew by 1.6% to Shs. 21,167.96 billion in September 2023 from Shs 20,841.38 billion in August 2023, with increases recorded for both shillings and foreign currency denominated credit. Shillings and foreign currency denominated credit rose to Shs 14,871.8 billion and Shs 6,296.1 billion in September 2023 from Shs 14,771.8 billion and Shs 6,069.5 billion, respectively in August 2023. This was in part due to the continued improvement in economic activity and positive sentiments about business conditions.