Louis Kasekende: Bank of Uganda's instruments to respond to
inflationary pressures
Remarks by Dr Louis Kasekende, Deputy Governor of the Bank of Uganda, at a dinner
hosted by DFCU Bank, Kampala, 5 May 2011.
* * *
The Chairman and Board of Directors of DFCU Bank Limited;
Senior Management of DFCU Bank Limited;
Chief Executives of various institutions;
Distinguished Guests;
Ladies and Gentlemen

The profile of DFCU Bank Limited reveals a common transformation process that
has occurred in Uganda's banking industry over the past 10 years;

Upon acquisition of the then Gold Trust Bank Limited by DFCU Limited, DFCU Bank
Limited was licenced as a commercial bank in 2000;

Over the last three years, DFCU Bank limited witnessed impressive growth in the
following key performance indicators:
Item 2006 2008 2010
Deposits Ugx. 127.0 bn Ugx. 220.8 bn Ugx. 489.7 bn
Assets Ugx. 209.4 bn Ugx. 493.5 bn Ugx. 817.0 bn
Loans/Advs Ugx.276.9 bn Ugx. 405.0 bn
Core Capital Ugx. 21.7 bn Ugx. 40.9 bn Ugx. 68.9 bn
Net Profit Ugx. 13.6 bn Ugx. 21.1 bn
Branches 9 19 26
ATMs 6 18 26

DFCU Bank Limited has all through the past period maintained full compliance with
statutory requirements on capital adequacy, which is a key performance indicator;

DFCU Bank Limited has been able to roll-out a number of financial products, which
include;
i) Savings Plus Foreign Accounts (Diaspora);
ii) Women in Business Accounts;
iii) Access Plus Loans;
iv) Tax Loans;
v) Contract Finance;
vi) Commodity Finance;
vii) Working Capital Loans;
viii) Internet Banking;

Behind this impressive performance of DFCU Bank Limited is the financial support
in terms of short to long-term loans drawn from committed partners under the
umbrella of the parent company, DFCU Limited. These shareholders include;
i) PROPARCO;
ii) NORFUND;
iii) CDC;
iv) FMO;
v) EIB;
vi) KFW

The above impressive performance has qualified DFCU Bank Limited into a major
contributor in the development of Uganda's financial sector, with a sizeable portion
of the market share;
 Turning to Bank of Uganda, I wish to re-affirm that as a monetary policy and
regulatory authority, the mission of "Maintaining price stability and a sound financial
system" remains paramount.

On the monetary front, the recent unfolding inflationary pressures have been
proactively responded to using a package of instruments, which include;
i) Pursuing a tight monetary policy stance to regulate money supply;
ii) Tactical interventions into the foreign exchange market to manage and
minimize sudden fluctuations in the exchange rate;

On the regulatory front, the following have been applied to ensure soundness and
stability of the financial sector:
i) Conducting regular on-site examinations and off-site surveillance of
supervised financial institutions in order to initiate prompt corrective actions as
warranted;
ii) Enhancing risk management framework in all supervised financial institutions;
iii) Implementation of risk-based supervision to foster timely identification,
measurement, monitoring and controls of risks inherent in the financial sector;
iv) Periodic reviews of the legal and regulatory framework to ensure update with
current developments in the financial sector;
v) Aligning the regulatory framework with international standards especially after
the recent global financial crisis;
vi) To facilitate innovation through amendment of the legal and regulatory
framework to permit the following:
i) Implement mobile money banking;
ii) Bancassurance;
iii) Islamic Banking & Finance products.

Rolling out guidelines for financial literacy and consumer protection.