Restructured loans reached Shs 7.9 trillion

By MARTIN LUTHER OKETCH

At least 7.9 trillion shillings worth loans have been restructured since April 2020 as part of the credit relief measure, according to the Bank of Uganda.

Central Bank data indicates that Shs 7.9 trillion of loans have been restructured, of which Shs 4.8 trillion remains in arrears.

“Shs764.5b of restructured loans are past due [while] 612.8 billion shillings [are] in the vigilant category, ”the Bank of Uganda said in the February 2021 monetary report.

Real estate, which accounts for 29 percent of restructured loans, according to the Central Bank report, holds the largest share of restructured loans, followed by trade with 23 percent and agriculture with 13 percent.
However, the Bank of Uganda has warned that if economic activity does not pick up, there is a risk that restructured loans that mature could turn into non-performing loans.

The report stated that non-performing loans as a percentage of total loans stood at 5.3% as of December 2020.

The credit relief measure, in which a number of loans were rescheduled, had sought to provide relief to borrowers due to slower economic activity and growth.

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The measures, last announced by the Central Bank, would be extended for another six months to allow borrowers to cope with the adverse impact of Covid-19 on their ability to repay their loans as well as reduce the risk of exposure banks.

During the period, the Bank of Uganda reported that the commercial bank interest rate on shilling denominated loans averaged 18.8% in the quarter to December 2020, compared to 20.2%, while interest on foreign currency denominated loans increased from 5.7% to 6.1%. hundred.

The Central Bank also noted significant progress on the main customers during the month of December 2020, in particular the telecoms to finance the capital expenditure, to face the costs of renewal of the licenses and to pay the taxes on the end of companies. ‘year.

Credit to the private sector from financial companies such as the Development Bank of Uganda increased 10.2% in December 2020 from 9.5%, in part due to the gradual recovery and growing demand for consumer credit. low cost.

The stock of UDB loans amounted to Shs 516 billion in December, compared to Shs 406 billion in September and Shs 333 billion in December 2019.

Net extensions by selected banks even if they remain at pre-Covid-19 levels.
There was an increase in both the value of loan applications and supply during the quarter ending in December.
The value of loan applications rose to 4.9 trillion shillings from 4.2 trillion shillings in September, while approved loans increased from 2.9 billion shillings to 2.7 billion shillings during the year. period.

Data from the Central Bank shows that credit to the private sector, excluding the UDB, stood at 7.4% in the quarter ended in December from 6.9% in September.

The market, the Bank of Uganda noted, has remained relatively stable, in line with policy interventions such as liquidity support measures in which two banks have so far accessed a total of 244 billion shillings.

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