KAMPALA, October 30, 2024 — Uganda’s largest bank by assets, Stanbic Bank, has reduced its local currency prime lending rate [PLR] to 19.50 percent from 19.75 percent, effective December 1, 2024.
This new rate will benefit both new and existing retail, business, and commercial clients, potentially prompting other commercial banks in the country to lower their PRLs in a bid to attract customers who are also being courted by Savings and Credit Cooperatives [SACCOs] which offer very low interest rates to members.
According to a public notice, Stanbic’s decision to reduce its PLR follows the Bank of Uganda’s [BoU] October 2024 Monetary Policy Advisory, which announced a 0.25 percent decrease in the central bank rate [CBR] to 9.75 percent. “This adjustment was made due to an improved inflation outlook, as the negative impacts of global shocks continue to diminish and the exchange rate remains stable against major currencies,” said BoU.
In August 2024, the weighted average lending rates for shilling-denominated credit rose to 19.1 percent, up from 17.8 percent in the previous month, driven by increased demand for credit.
The Monthly Performance of the Economy Report for September 2024, published by the Finance Ministry, noted that the stock of outstanding private sector credit grew by 0.2 percent, from Shs 22,243.07 billion in July 2024 to Shs 22,284.81bln in August 2024. “This followed higher disbursements for credit compared to the previous month,” the report stated.
BoU has previously criticised local banks for not aligning their rates with the CBR, as some institutions continue to charge interest rates exceeding 20 percent. Banks, however, argue that various risks necessitate maintaining higher rates.
https://thecooperator.news/stanbic-reports-3-8-percent-increase-in-total-assets/
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