Banks to make more profits in new financial year-Economists

By Ritah Kemigisa

Economists are projecting that the financial sector will for the next three years continue making more revenue out of the covid19 crisis.

Data compiled by KFM from different commercial banks’ 2020 financial results show that most banks closed with profits much as they were reduced compared to 2019.

Majority of the banks also witnessed growth in their assets and customer deposits.

Makerere university Business schools economics lecturer, Ramathan Goobi attributes the profit trend to the central bank’s decision to maintain the policy and lending interest rate at the lowest 7% and yet the commercial banks did not change theirs.

He adds that the decision by the government not to shut cargo at the height of the lockdown also led to growth in loans and customer deposits because the business people remained in business.

Goobi meanwhile says banks are to witness an increase in demand for credit as the economy continues to recover.

“With the recovery now. we are likely to see increased demand for credit and with the central bank also having a policy to support recovery it might lower the CBR and  continue allowing banks to extend credit to businesses which under normal circumstances would not get such credit,” says Goobi.

Written by Noelyn Nassuuna