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Assets in banking sector grow to Shs30.3 trillion
Improved quality: Apart from growing exponentially, the quality of assets in the banking sector improved in the period ended June 2019. PHOTO BY ERONIE KAMUKAMA
Total assets in the banking sector grew by 10.5 per cent for the year ended June 2019, according to details contained in the financial results of the Deposit Protection Fund that where released last week.
The results indicate that total assets in the banking sector increased from Shs27.4 trillion in June 2018 to Shs30.3 trillion in June 2019.
The growth was mainly on account of an increase in total industry gross loans and holdings of treasury instruments, which grew by 11.2 per cent and 14.7 per cent, respectively.
Details also indicate that the banking sector during the period was adequately capitalised with aggregate industry total capital & core capital adequacy ratios at 22.1 per cent and 20.3 per cent, respectively.
This was above the minimum capital adequacy requirements of 12 per cent and 10 per cent, respectively.
The sector also maintained adequate liquidity buffers, with the ratio of liquid assets to deposit standing at 45.5 per cent as at end of June 2019.
This, according to details, was well above the minimum statutory requirement of 20 per cent.
Asset quality of the banking sector, details indicate, continued to improve during the period under review.
As of June 30, 2019, the aggregate industry non-performing loan ratio (non-performing loans and advances to gross loans and advances) stood at 3.8 per cent, an improvement from 4.4 per cent in June 2018.
Details in the results of the Deposit Protection Fund indicate that all the five credit institutions, as of June 2019, held adequate capital and liquidity buffers with aggregate core capital and total capital to risk-weighted assets ratios standing at 21.8 per cent and 23.5 per cent, respectively.
Total assets held by this subsector grew by 56.3 per cent to Shs963.0 billion while net loans and advances increased by 76.6 per cent. Total deposits rose by 5.8 per cent over the period under review.
All the five micro deposit-taking institutions (MDI), details show, as of June 2019, with aggregate core and total capital adequacy ratios standing at 41.8 per cent and 45.0 per cent, respectively.
Total assets held by this subsector increased by 16.6 per cent to Shs562.2b. The increase was on the account of growth in gross loans of Shs55.2b, increased investment in the fixed assets of Shs14.9b and growth in balances held with financial institutions of Shs5.5b as of end June 2019.
Other growth areas in the banking industry
During the period, according to details, total deposits within the banking sector grew by 8.9 per cent from Shs20 trillion in June 2018 to 22 trillion in June 2019, while the number of deposit accounts increased from 11 million to approximately 14 million over the period, representing a 26.4 per cent growth.
The results of the Deposit Protection Fund contains information about the performance of the banking sector during the period, which shows that the performance of Uganda’s banking sector improved over the year.
This was fostered by positive economic growth, improvement in domestic financing conditions, increased public settlement of domestic arrears and investment in energy and infrastructure. For the year ended June 2019, there was continued recovery in lending activity, improving asset quality and increased capital and liquidity buffers.
According to the results, assets of the Deposit Protection Fund grew by Shs112b in the period compared to an increase of Shs83b in the same period last year. As of June 2019, the Deposit Protection Assets stood at Shs689b from Shs558b in June 2018.
