A close look at the BoU Financial Soundness Indicators Report for October shows that while average Net Interest Margins for the banking industry barely changed, growing from 11.61% in Q1 2016 to 11.57% in Q4 2017, cost to income ratios grew by 10% percent points from 75.27% to 82.85%. Suffice to note that in the same period, the economy grew between 3-5%. In basic finance, if your costs are growing faster than the economy is growing, then there is reason to worry.
In his speech at the official opening of Cairo International Bank’s branch at Garden City on November 14, 2017, the Deputy Governor Bank of Uganda, Dr Louis Kasekende (PhD), challenged commercial banks on keeping interest rates high despite the various moves largely orchestrated by the central bank in the financial markets, changes that would otherwise warrant significant interest rate cuts.
“This development is unfortunate and counterproductive,
