According to the central Bank of Uganda (BoU) report, the total stock of non-performing loans (NPLs) across the banking industry rose by 22% to 853.1 billion shillings ($241.95 million) as at December 2020 compared to the previous year.
"This was on the back of weak economic activity hampered by the onset of the COVID-19 pandemic which adversely affected the income of borrowers," the report said.
Uganda's banking industry includes local units of international financial giants like Standard Chartered, Standard Bank and Absa.
Uganda implemented one of Africa's tightest lockdowns last year to try to stem the spread of the COVID-19 pandemic, including shuttering all businesses but the most essential and bans on movement of both public and private vehicles.
Those stringent restrictions sent the economy into a tailspin, causing the country's GDP to contract by 1.1% last year, according to the finance ministry.
Authorities gradually eased the lockdown as cases of infections slowed sharply through late last year and early this year.
But last month, infections suddenly started spiking in what the government says is a second wave and President Yoweri Museveni on Sunday night re-imposed a lockdown, potentially undermining a fragile economic recovery underway.
BoU also said the value of bad loans written off across the industry had risen 47% to 242.6 billion shillings last year from 2019.
The steep surge in NPLs would have been higher, the bank said, but its credit relief measures implemented to help distressed borrowers during the pandemic helped to limit the impact.
"Going forward it is expected that the slow pace of recovery is likely to continue negatively affecting loan quality until economic activity is stronger," BoU said.
($1 = 3,526.0000 Ugandan shillings)
(Reporting by Elias Biryabarema; Editing by Andrea Ricci)
