The Independent Uganda: You get the Truth we Pay the Price
Private sector credit up
Total PSC grew by 9.2% in the quarter ending October 2021 relative to 7.9% growth in the quarter ending July 2021. In fact, with the Uganda Development Bank numbers included, PSC grew by 11.9% relative to 10.8% in the same period.
The number of applications approved dropped, but the value of loans extended increased particularly in the manufacturing and trade sectors.
BoU’s report says the number of loan applications approved fell to 1.15 million applications in the quarter ending October 2021 from 1.31 million in the quarter ending July 2021.
The value of loan approvals rose to Shs2.76trillion from Shs2.18 trillion in the quarter ending July 2021.
Interest rates
As the CBR was maintained, lenders somewhat increased interest rates citing high risks. Lending rates increased in the quarter ending October 2021 to an average of 19.0% from 17.61% in the quarter ending July 2021, reflecting increased risk aversion and the expiry of the credit relief measures.
On a monthly basis, lending rates increased from 19.05% in September 2021 to 19.66% in October 2021. Increases were registered across all sectors, with trade, manufacturing and personal loans registering the highest increases.
Prime lending rates averaged 17.1% in the quarter ending October 2021, down by 0.1 percentage points from the previous quarter.
Key sectors of manufacturing, real estate and personal loans were the main drivers of PSC growth. But growth was sluggish for agriculture, trade, and business sectors.
The central bank granted supervised financial institutions at their discretion, exceptional permission to provide repayment credit relief to borrowers, negatively affected by the pandemic, in the hospitality and education sectors. Players like Stanbic Bank and Absa and others have already responded to this call.
The Uganda shilling, meanwhile, depreciated in the quarter ending October 2021 by 0.3%, on a quarterly basis, but appreciated by 4.2%, on an annual basis – which according to pundits is a plus for the economy. This trend is expected to continue in 2022.
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