Loan write-offs rose by 26.1 billion shillings ($7 million) quarter-on-quarter to 128.9 billion shillings in the third quarter of 2022, The Monitor newspaper reported, citing the Bank of Uganda official.

The central bank’s director for financial stability Robert Mbabazize said that the asset quality of commercial banks improved across the sector, primarily due to prudent write-off of bad loans. 

Supervised financial institutions registered a slight decline in non-performing loans to 5.2 percent in Q3 2022 from 5.4 percent in Q2 2022.

However, credit growth remained subdued due to muted economic growth with supervised financial institutions, recording a 3.2 percent, or 624 billion shillings, growth in loans to 19.9 trillion shillings.

Manufacturing and real estate credit fell while agriculture reported an increase.

Mbabazize noted that the banking sector remains resilient but indicated that household and corporate debt servicing costs continue to rise due to emerging macro risk factors and Covid-19 credit relief measures.  

(Editing by Seban Scaria )