KAMPALA – Fitch Rating, an International Credit rating agency worldwide has assigned Uganda Development Bank Ltd (UDB) a long-term rating of AAA (uga) with a Stable Outlook. The bank was also assigned a long-term Issuer Default Rating (IDR) of B+ with a negative outlook.
This is the highest credit rating attainable on Uganda’s National scale and it reflects their commitment to accelerate socio-economic development through sustainable financial interventions.
Patricia Ojangole, the UDB Managing Director said the ‘AAA (Uga)’ rating by Fitch is a testament to the Bank’s robust institutional health and lends credence to the overall sustainability of the Bank.
Ojangole said a credit rating is an assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation.
“Credit ratings can be assigned to any entity that seeks to borrow money. It can be an individual, corporation, state or provincial authority, or sovereign government.” Patricia Ojangore assured.
A credit rating is a vital tool in enabling its funding partners to assess its relative buoyancy. Among the key rating drivers was UDB’s important policy role as Uganda’s primary development bank.
Also, the Bank lends on preferential terms to borrowers in strategically important sectors of the economy, in particular agriculture, agro-processing, and manufacturing, is funded predominantly by shareholder equity in addition to relatively low-priced borrowings that are mostly government-guaranteed and lends to potentially riskier sectors that are underserved by other financial institutions. Additionally, the Bank is financially sustainable with annual operating returns on assets averaging 4.5% between 2019-2022.
“What this rating means for us is that UDB can potentially access funding from multi-lateral funders at relatively lower rates; this is because investors can accept lower lending rates to entities that present with lower risk of default. Additionally, it means the Bank can access a wider audience of funders with greater ease and confidence.” Ojangole says.
Ojangole revealed that the Bank received capital contributions worth UGX 1.295 trillion from the government which enabled them to maintain their financial position.
“Over the past four years we received government capital contributions totaling UGX1.295 trillion she added that this support, coupled with our prudent financial management, has allowed us to maintain a healthy and sustainable statement of Financial Position.” UDB Managing Director said.
Ojangore recognizes the efforts of the government of Uganda and the Ministry of Finance for the support rendered over time.
“We are grateful to our various stakeholders, but more especially the Ugandan government, for the ongoing support that ensures the Bank continues to deliver its mandate,” she said.
