A number of banks are battling with customers who have failed to repay loans worth Shs1.1 trillion as of 31st December 2021.
Commercial banks are required by law to publish their financial statements/results for the previous year (which ends every 31st December) in a national newspaper before May of the following year.
It’s against this background that banks have recently been releasing/publishing their audited financial statements for the year ended 31st December 2021.
This website has exclusively compiled and analyzed the results so as to help customers, partners and stakeholders of these financial institutions to know how their banks performed as well as help them make informed decisions.
This analysis is also important for students with a bias in banking finance as well as policy makers.
According to the results, total industry Non-Performing Loans (NPLs) increased to Shs1.1 trillion in 2021, up from Shs1 trillion registered a year earlier.
A Non-Performing Loan (NPL) is a loan in which the borrower is in default and hasn’t made any scheduled payments of principal or interest for a certain period of time. In banking, commercial loans are considered nonperforming if the borrower is 90 days past due.
NPLs are subject to late repayment or are unlikely to be repaid by the borrower.
Banks With huge NPLs
According to the Bank of Uganda, NPLs are considered high when the NPL ratio exceeds 5%. NPL ratio is the ratio of the amount of NPLs in a bank’s loan portfolio to the total amount of outstanding loans the bank holds.
The analyzed financial statements for all the 26 banks show that total industry NPL ratio stands at 6.4% as of 31st December 2021.
Banks with huge NPLs
Tropical Bank that is headed by Abdulaziz Mohamed Mansur as Managing Director has the highest NPLs in the market.
Tropical’s NPL ratio is 31.3%. The bank’s NPLs increased to Shs37.51bn in 2021, up from Shs28.8bn in 2020. Its loans advanced to customers stood at Shs119.67bn as of 31st December 2021.
It is followed by dfcu Bank. The bank’s NPL ratio is 18.14% as of 31st December 2021. This is after its NPLs increased to Shs274.04bn in 2021, up from Shs94.09bn recorded a year earlier.
Dfcu’s loans advanced to customers in 2021 stood at Shs1.51 trillion.
Ecobank also has huge NPLs. It occupies the third position with NPL ratio of 15.4%. Ecobank is headed by Grace Muliisa as Managing Director. She has a big task of turning around the bank because the Pan-African bank extended loans to customers worth Shs91.4bn in 2021. The bank’s NPLs increased to Shs14.1bn in 2021, up from Shs13.8bn recorded a year earlier.
Mumba Kalifungwa, the Managing Director of Absa Bank Uganda also has a huge task of reducing NPLs. The bank’s NPL ratio stands at 15.1%. Absa’s NPLs reduced to Shs198bn in 2021, down from Shs234.5bn in 2020. This is against Shs1.3bn net loans advanced to customers in 2021.
It is followed by NCBA that is headed by Mark Muyobo as Ag. Managing Director. The bank’s NPL ratio stands at 10.23%. This is after its NPLs reduced to Shs22.39bn in 2021, down from Shs52.5bn recorded a year earlier. The bank advanced loans worth Shs218.84bn to customers in 2021.
In 6th position is Finance Trust Bank that is headed by Annet Nakawunde as Managing Director. The bank’s NPL ratio is 8.34%. This is after its NPLs increased to Shs20.25bn in 2021, up from Shs10.84bn recorded a year earlier.
By Business focus uganda