Members of Uganda Bankers Association (UBA) have elected Mathias Katamba, as the new Chairman taking over from Patrick Mweheire who served for two years (2018 & 2019).
Katamba is the Chief Executive Officer of dfcu Bank Uganda.
Also elected on the executive committee of UBA is Sarah Arapta, Citibank CEO as Vice-Chair, Varghese Thambi, CEO Diamond Trust Bank as Treasurer, Sam Ntulume, CEO NC Bank as Auditor, Albert Saltson, CEO Standard Chartered Bank, Committee Member and Veronica Namagembe, CEO Pride Microfinance (MDI), also a Committee Member.
The new leadership assumes responsibility at a time when the industry has registered significant improvements in the areas of profitability, credit extension, channels and growth in assets over the past year 2019.
Outgoing Chairman Patrick Mweheire said that in 2019, two financial institutions namely Opportunity Bank and Afriland Bank were issued with commercial banking licenses bringing the total number of tier I banks to 26.
He highlighted that the total assets of the banking industry had increased by 16.7% from Ugx 28.1 trillion at the end of December 2018 to Ugx 32.8 trillion as at December 2019.
This growth he said was attributed to the Growth in loans & advances by 13.9% from Ugx 12.7 trillion reported in 2018 to Ugx 14.46 trillion in 2019.
“In the year 2019, the banking industry registered a growth in loans/ credit facilities spread across most sectors with Real Estate & Construction accounting for 20.2 % of the total industry loan book, followed closely by trade & commerce at 19.2% personal & household loans at 18.4%, followed by agriculture and manufacturing at 13.5% and 12.8 % respectively.
“Lending to agriculture registered the highest annual growth rate of 18.1% (Ugx 298 billion) largely attributed to lending extended in the areas of agro-processing (Ugx 219.2 billion),” said Mweheire.
Growth in customer deposits by 18.4% from Ugx 19.6 trillion in December 2018 to Ugx 23.2 trillion in December 2019 was also recorded according to Mweheire. Shillings deposits stood at 14.2 trillion (62.8%) while FX deposits were recorded at 8.7 trillion (37.2%).
There was also growth in the total number of accounts recorded at 15,423,426 as at December 2019 compared to 12,172,484 as at December 2018 representing a growth of 21%.
“Growth of access channels, specifically agent banking points across the country increased to 12,154 by end of December 2019.
“In the previous years, the industry operated less than 800 branches & 1,000 ATMs across the country with high costs incurred in the maintenance of these channels.
“Aggregate cost to income ratio improved from 73.9% in 2018 to 61.4% in 2019. Eight banks however made losses in 2019 largely brought about by more provisioning for non-performing loans,” he said.
Mweheire said that the cornerstone of the industry’s medium-term (2019-2021) strategy remains to leverage ICT for digital financial services to increase access to and drive initiatives to lower the cost of delivering financial services.
He reported that the association spearheaded the project to build infrastructure to enable member financial institutions to gain access to the national identity and registration authority (NIRA) database for purposes of verification of identity and authentication of transactions which project is expected to go live this year 2020.
Mweheire said the strategy retreat held with Bank of Uganda to dimension and review the much-needed regulatory reforms to help take the sector to the next level and reported that a joint UBA-BOU taskforce was put in place to work with consultants engaged with the assistance of FSDU to work through the details and ensure completion of this assignment before the end of 2020.
Regarding the challenge of case backlog & capital tied up in litigation cases, Mweheire reported that the association, working in collaboration with the Uganda Law Society and other stakeholders had championed the establishment of a private sector-led arbitration centre (the International Center for Arbitration & Mediation in Kampala (ICAMEK) that was launched on the 25th April 2019.
The establishment of ICAMEK was triggered by the growing number of commercial disputes. Consequently, the demand from various stakeholders was to have an effective dispute resolution mechanism that fosters speedy resolution of disputes & to unlock capital & business growth therein.
On the future outlook, the outgoing Chairman noted that the outbreak of COVID-19 and its impact across most sectors had fueled uncertainty and was expected to have serious economic implications including reduced economic and investment activity precipitated by supply-side shocks for the economy.
He said in an effort to address the cash flow challenges arising out of the COVID-19 pandemic, Supervised Financial Institutions are offering credit relief and loan restructuring measures over a period of 12 months that customers can access through their respective institutions.
These include a moratorium, extension of the loan repayment period, and other forms of restructuring provided for under the requisite regulations.
Financial institutions also waived off (zero-rated) charges for the bank to wallet transactions, as well as transactions below Ugx 50,000/= at ATMs or agent locations during the lockdown period.
He further added that the industry had to date responded to Government’s call and contributed a combined sum of Ugx 2.8 billion by way of cash, PPE and various forms of support towards the fight against effects of COVID-19.
BY FRANK SEMATA