Commercial bank’s credit to the private sector in February grew 7.5% year-on-year, the highest rate in 10 months, driven by personal loans and household loans, and more lending to the agriculture and trade sectors.
Personal loans and household loans – whose total share of total lending was 17.3% – increased by 19.5% compared to February 2016 to Shs1,988.8bn, data from Bank of Uganda show. An increase in loans for the purchase of durable goods by 53% was responsible for the rise.
Credit to the agriculture sector grew 14.5% year-on-year, with loans for processing and marketing increasing by 20.7%. Loans to the sector made up 10.3% of total commercial bank lending.
An increase in loans for imports (108%) and to restaurants and hotels (13.7%) pushed up credit to the trade sector by 6.6% compared to February 2016. Export loans however declined by 25.7% year-on-year.
A decline was registered for credit to the building, mortgage, construction and real estate sector, which still accounted for the largest share of loans at 21.4%. Total lending to the sector fell 4.9% to Shs2,462bn.
The decline was driven by a 6.6% fall in mortgages, with residential mortgages retreating by 16.6%; commercial mortgages, however, rose by 7.7%. Loans for land purchases also fell by 50.8%.
Credit to the manufacturing sector also fell 5.6%, with an 11.5% decline in lending to the food, beverages and tobacco industries driving the contraction.
On a month-on-month basis commercial bank’s credit to the private sector fell slightly by 0.06% to Shs11,509.5bn – its lowest level in four months – compared to Shs11,516bn in January.
The monthly decline was driven by a 5.4% fall in lending to the building, mortgage, construction and real estate sector, and a 3% decrease in credit to the trade sector. Credit to agriculture, however, grew 5.5%.