Africa-Press – Uganda. Uganda’s banking sector has remained resilient and stable during the year ending June 2025, supported by the Bank of Uganda’s accommodative monetary policy and targeted measures to strengthen the financial system.
According to the Integrated Annual Report 2024/2025, the sector recorded its highest growth in three years, driven by improved liquidity management, stronger credit performance, and increased profitability.
“The banking industry remained safe and sound over the year to June 2025. Growth remained strong, supported by BoU’s accommodative policy stance and targeted measures aimed at reinforcing the stability of the financial sector,” the report states.
Total banking sector assets grew by 13.7%, rising from Shs 53.9 trillion in 2024 to Shs 61.3 trillion in 2025. This growth was supported by improved performance across major balance sheet indicators and a significant rise in customer deposits.
Deposits increased by 14.2%, reaching Shs 41.6 trillion from Shs 36.4 trillion the previous year. At the same time, loans and advances to the private sector grew by 9.2%, up from 6.8% in 2024, signalling improved credit demand and a stronger private sector recovery.
Profitability across the sector strengthened considerably. Aggregate net profit after tax (NPAT) rose to Shs 1.9 trillion, a 36% increase from Shs 1.4 trillion in the financial year 2023/24.
This was largely driven by a 16% rise in government securities holdings, which climbed to Shs 17.4 trillion as banks managed their liquidity more strategically.
Interest income increased by 10.7%, supported by stronger credit performance and declining costs related to non-performing assets.
Expected credit losses reduced to Shs 761.2 billion, reflecting improved borrower repayment and more effective risk controls.
Non-performing loans (NPLs) dropped from 4.9% in 2024 to 3.7% in 2025, with the total NPL stock reducing to Shs 881.6 billion. This contributed to higher profitability and stronger balance sheets. Return on assets (ROA) improved to 3.3%, showing greater operational efficiency across the banking industry.
The Core Capital to Risk-Weighted Assets Ratio stood at 25%, well above the regulatory minimum, while all Domestic Systemically Important Banks met the systemic risk buffer requirements, underlining the sector’s shock-absorbing capacity.
Liquidity in the sector remained exceptionally strong. Liquid assets grew by 33.4% to Shs 23.1 trillion, pushing the liquid assets-to-deposits ratio to 56.4%.
The Liquidity Coverage Ratio reached 498.7%, and the Net Stable Funding Ratio stood at 184%, both far exceeding regulatory thresholds.
The Bank of Uganda also conducted the first Bottom-Up Stress Test (BUST) for Domestic Systemically Important Banks. Results indicated that most institutions are resilient to shocks, though a few would face challenges under extreme conditions.
BoU is closely monitoring those banks and implementing necessary interventions.
To further enhance oversight and resilience, a new cyber and operational risk monitoring tool for payment service providers was developed and piloted starting July 1, 2025.
This tool aims to strengthen the sector’s digital and operational risk frameworks. Meanwhile, reliance on the Bank of Uganda Standing Lending Facility declined, indicating banks’ growing self-sufficiency in managing short-term liquidity.
The Bank of Uganda affirms that the banking sector remains fundamentally strong, backed by robust capital buffers, improving asset quality, and effective risk management.
The Integrated Annual Report 2024/2025 concludes that with rising deposits, improved liquidity, declining non-performing loans, and solid earnings, Uganda’s banking industry is well-positioned to support sustainable economic growth and safeguard financial stability.
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