The size of Uganda’s banking sector, 2020

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It is that time of the year when the summitBI®, a business intelligence, and data analytics team at Summit Consulting Ltd, publish the annual banking report.

The Summit Banking Intelligence Report 2020 (sBIR20) is more detailed and insightful. It comes at the time the banking sector, like other sectors, is weathering the effects of the coronavirus pandemic.

The report provides an analysis of the banking sector using the published annual reports for the year ending 31st December 2019, as required by section 26 of the Financial institutions’ Act, 2016. In the report, find the domestic macro-financial environment with a particular focus on the performance and financial stability of the sector.

Guided by the feedback from readers of the prior reports, and to further deliver the most comprehensive analysis of the banking sector, we have deployed Summit’s indices to bring out the true status of each bank. The indices we have employed include:

  1. summitCapitalAdequacy™ Index (SCAI) Rating
  2. summitAssetQuality™ Index (SAQI) Rating
  3. summitManagementEfficiency™ Index (SMEI) Rating
  4. summitEarnings & Profitability™ Index (SE&PI) Rating
  5. summitLiquidity™ Index (SLI) Rating

The report covers the entire regulated financial sector. Inset is a snapshot of commercial bank performance in Uganda as of 2019 (Figure 1). While this only includes commercial banks (Tier I) the entire reports assesses the stability of the entire financial sector, that is 34 financial institutions from Tier I to Tier III.

The banking sector in Uganda has seen steady progress over the years. In 2003, there were 14 commercial banks with a total asset base of Ugx 5.116 trillion, representing average assets per regulated bank of Ugx. 0.37 trillion. By the end of the year 2019, the sector’s total assets had risen to Ugx. 33.380 trillion, representing average total assets per regulated bank of Ugx. 1.28 trillion, representing a percentage asset base growth of 251% over the 16 years. Afriland First Bank from Cameroon also joined the financial sector to increase the number of regulated commercial banks in the country.

Figure 1: Total banks in Uganda as of 2019 y/e


While the financial sector has grown in size, bank performance has declined significantly with more financial institutions going undercapitalized, lower asset quality, increased loss-making banks and a lower return on investment.

While there were just three(3) undercapitalized banks in Uganda in the prior year, there have been five in 2019 including Orient bank, Tropical Bank, CBA, KCB and Top Finance Bank.

The financial sector also had lower asset quality with non-performing loans increasing from 5.1% of total loans to 5.4% with delinquency spreading around every economic segment. This was an overall decline in credit management.

At least seven (7) banks made losses compared to the 5 in 2019. This was by far due to high impairment charges especially banks like Tropical Bank, Orient and Top Finance Bank while some banks like Cairo suffered losses due to increased personnel costs.

Bank stakeholders received a lower return on investment dropping from 4.7% in 2018 to 2.4% in 2019. This was mainly due to a slump in profitability in a number of financial institutions and increased number of loss-making financial institutions.

Management teams were more efficient at controlling costs generally with industrial cost to income dropping to 81.4% and an overall better credit risk management with impairment losses falling from 1.67% in 2018 to 1.63% in 2019.

This year, we Summit Consulting Ltd will launch the banking sector report live via Zoom, to all interested. The launch shall feature presentations by the Summit Consulting Ltd data analytics and strategy experts to provide deeper insights about banking sector performance, stability and new developments in the industry.   If you are interested in partnering with us in promoting the sector and are not one of the financial sector players, contact us. Otherwise, you are all welcome to register to attend the report launch on 14th August 2020, at 10 am.

As a participant, you will be the first to receive the banking sector report 2020 – both an executive PPT summary for board briefing and a detailed sector report covering all the banks.

To register to attend the launch webinar, click here >>

To subscribe and receive the banking sector report,

Copyright Summit Consulting Ltd, 2020. All rights reserved.


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