Grapevine

Non-performing loans drop but credit extension remains subdued

The ratio of non-performing loans declined to 4.9 percent in the quarter ended June compared to 5.2 percent in March.

In its Monetary Policy Report for the period ended June, Bank of Uganda indicated that the decline was largely registered among shilling-denominated facilities for which non-performing loans dropped to 5.4 percent in June from 5.7 percent in March, but foreign currency facilities experienced an increase from 3.4 percent to 4.1 percent.

Overall, the highest rate of non-performing loans was observed in agriculture, trade, and business services, mainly due to the underperformance of the fishing, forestry, and restaurant sectors.

Data further indicates that private sector credit remained subdued in the three months to June, falling to 7.1 percent from 8.3 percent.

Bank of Uganda also noted that net credit extensions in the three months to June 2024 rose to Shs723.7b from Shs70.7b in March although this was skewed towards prime corporate borrowers.