Loan growth at commercial banks was muted in July, underscoring the central bank’s recent decision to ease monetary policy as it tries to boost economic growth.
The stock of outstanding loans from banks rose 2.1 per cent from a year earlier to Shs19.8tn ($5.3bn), according to Bank of Uganda data, decelerating from 2.7 per cent in June and the slowest pace since October 2016. It is also the third straight month the reading has weakened.
Uganda shilling-denominated credit jumped 10.4 per cent year on year – the sharpest rise since January – to Shs13.9tn. Foreign currency loans declined for the third consecutive month, falling 13.1 per cent to Shs5.9tn.
Compared to the previous month, commercial bank loans perked up in July, rising 0.7 per cent versus a decline of 0.6 per cent the previous month.
Outstanding credit to the community, social and other services sector reduced by Shs563.2bn on year, while loans to general construction contractors were down 23.5 per cent to Shs620.9bn, driving the 0.1 per cent contraction in lending to the building, mortgage, construction, and real estate sector.
In addition, credit to electricity and water entities fell 39.2 per cent from a year ago, driven by a reduction in debt held by electricity, lighting, and power companies. The pool of outstanding loans to agriculture also declined by 4.2 per cent.
The expansion in commercial bank credit was mainly due to a rise in personal and household loans, commercial mortgages, and lending to manufacturing.
