Finance & Banking

Local banks post total assets of Shs 46.1trn in 2022

KAMPALA - The Uganda Bankers’ Association [UBA] in its annual report shows the local banking industry grew its total assets by 11.2 percent to Shs 46.1 trillion in 2022 compared to Shs 41.4trn recorded in the previous year.

According to the report, total assets grew mainly as a result of increased trading in securities of Shs 2.1trn and net loans and advances to customers of Shs 1.9trn.

Customer deposits grew by 12 percent to 31.6trn in 2022 from Shs 28.2trn in the financial 2021, while total loans stood at Shs 19.9trn in financial year 2022 up from Shs 17.7trn recorded in financial year 2021.

Industry profitability was recorded at Shs 1.21trn for financial 2022 compared to Shs 1.35trn recorded in financial year 2021, representing a 10.6 percent drop year on year.

Despite a more challenging economic environment, the report says only three commercial banks in the country posted losses in financial year 2022 compared to eight in the previous year.

It was noted that with the current gross domestic product [GDP] growth forecasts, improving economic growth is expected to support businesses and household incomes thereby supporting the banking sector performance.

“The industry is optimistic that 2023 will register growth despite of the economic and geopolitical challenges, however rising domestic public debt levels could adversely affect financial market sentiments and offshore capital flows.”

“We continue to be aware of evolving challenges and emerging issues such as credit risk, which remains elevated, partly as banks write off further credit losses arising from outstanding CRM loans and pass through of higher lending rates on asset quality,” said Sarah Arapta, the chairperson of Uganda Bankers’ Association [UBA] and CEO Citibank.

She added: “Rising provisions for credit risk and market losses may thus continue to affect banks’ earnings. High credit write-offs and operational risk charges are likely to reduce profitability and capital buffers during 2023 save for the revised paid-up capital requirements.”

Meanwhile, shared agent banking system processed 9.1 million transactions worth 10.3trn during the course of 2022.

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