Bank of Uganda has recovers from an Shs859 billion loss

After posting a profit for the year ended June 2020, Bank of Uganda has recovered from an Shs859 billion loss, according to a news report by Daily Monitor.

Details contained in the Bank of Uganda annual report states that the Central Bank, for the period running between June 2019 and June 2020 has registered a profit of Shs111b mainly because of improved income and reduction in operating expenses.

The Central Bank had for the period ended June 2019 registered an Shs859b loss due to shocks in the foreign exchange market, which wiped out substantial earnings from foreign reserve deposits, and a drastic increase in interest on government paper.

The loss had come on the back of an Shs424.11b profit that the Central Bank had reported for the period ended June 2018. The annual report, which was released last Thursday, indicates that the Central Bank recorded a 90 percent increase in interest income while operational expenses reduced minimally by 0.3 percent.

For instance, the report indicates, during the period to June, the bank reported an interest income of Shs423.5b compared to Shs223.4b for the year ended June 2019. The increase was mainly due to growth in interest income realized in short term and temporary advances to the government to fund shortfalls.

Interest income realized from government debt (T-Bills and Bonds) during the period amounted to Shs76.29b while income from temporary advances to fund shortfalls stood at Shs105.9b. Interest income from foreign reserves, which mainly includes investments in high-yielding markets such as the US, stood at USD 36m generated from dollar-denominated deposits and Treasury Bills compared to USD 25m realized in the 2018/19 financial year.