Assets for Uganda’s Deposit Protection Fund (DPF) grew by 15% to UGX. 1.15 trillion as per June 2022, with key investments in government treasury bills and treasury bonds.
This was revealed by DPF Chief Executive Officer (CEO) Julia Claire Olima Oyet as she officially released the DPF annual report for the year 2022 on January 31st at the entity headquarters in Nakasero, Kampala.
According to the report, the fund’s surplus and reserves increased from UGX. 952 billion to UGX. 989 billion, as a result of an uptick in comprehensive income worth UGX. 144 billion earned during the period, something attributed to investment returns and premium contributions from member entities.
The fund’s investments in government securities increased from UGX. 989 billion to UGX. 1,128 billion in 2022.
Additionally, the fund’s total income increased from UGX. 177 billion to UGX. 218 billon. Income from investments also grew by UGX. 26 billion, whereas that from contributions increased by UGX. 8 billion.
Ms. Olima Oyet revealed that government securities make up 98% of the fund’s total assets, which is in tandem with the fund’s endeavor to strike a complicated balance between capital preservation, liquidity and return, while maintaining is current statutory investment options.
She also clarified that DPF’s current protection limit of UGX. 10 million accounts for 98% of the total number of accounts in Uganda’s banking sector, which supersedes 90% benchmark set by the East African Monetary Affairs Committee.
This current state of affairs builds confidence among the public in the country’s banking sector; something that has heightened the the total number of bank accounts by 8.4 % to 20.7 million as of June 30th, 2022 from 19.1 million as of June 30, 2021.
“The growth in interest income was due to an increase in the size of the investment portfolio while increased deposit levels in the banking sector resulted in higher annual premiums remitted to the fund,” said the Fund’s CEO Ms. Olima Oyet.
The Fund’s operational costs, she said, fell more than three-fold from UGX. 20 billion to UGX. 6 billion during the same period under review which preceded a UGX. 11 billion tax recovery from Uganda Revenue Authority (URA)
“Overall, the cost-to-investment income ratio stood at 10% which was below the approved board limit of 25%,” Ms. Olima Oyet added.
In the meantime, deposits by the banking sector’s total deposits hiked by 6.5 % to UGX. 33 trillion from Shs31 trillion during the period under review.
The DPF is a government entity instituted under the Financial Institutions Amendment Act of 2016 to compensate depositors with up to UGX.10 million in the event of bank closure.
Among other achievements, the fund established a business recovery site at Bank of Uganda, installed critical information technology infrastructure and operationalized of all the fund’s functions, including audit and key procurements.
The Fund also undertook development and rollout of the Depositor Payout and Premium Management System, an initiate that makes it possible for the fund to pay depositors on a fast-track basis via different payment platforms.
Also important to note, the fund started on-site inspections of its premium-contributing institutions to establish the accuracy of depositor records and deposit balances, on top of instituting close cooperation with well founded deposit insurance entities in other states.
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