Africa-Press – Uganda. Uganda’s financial sector has registered steady growth and resilience, with customer deposits rising to Shs 38 trillion by March 2025 an important milestone that reflects renewed public confidence, improved liquidity, and ongoing economic recovery.
According to the Bank of Uganda’s Quarterly Financial Stability Review for March 2025, supervised financial institutions (SFIs) remain sound, well-capitalised, and capable of supporting both private sector credit and public investment.
The report shows that the banking sector’s exposure to government securities as a share of total assets slightly increased to 30.4 %, up from 29.9% in December 2024.
However, the central bank noted that SFIs continue to maintain strong capital buffers, ensuring financial stability.
One of the key drivers of the sector’s growth was a 4 % increase in customer deposits, which reversed a previous decline.
The growth was largely attributed to a 6.6 % rise in foreign currency deposits and a 2.7 % increase in Shilling-denominated deposits. Deposits now account for 83.4 % of total liabilities in the banking system, reaffirming their role as the main source of funding for financial institutions.
Liquidity also strengthened during the period. Total liquid assets held by SFIs grew by 1.1 % to Shs 20.5 trillion, driven mainly by higher investment in government securities by commercial banks and credit institutions.
This pushed the sector’s liquidity ratio to 51.8 % in March 2025, up from 51.1 % in December 2024 well above the regulatory minimum of 20 %.
Meanwhile, credit activity picked up pace, with the total value of loans issued by SFIs increasing by 6.8 % year-on-year to Shs 22.9 trillion.
While the share of private sector credit as a proportion of total assets declined slightly from 41 % to 40.5 %, it remains a cornerstone of banking activity, supporting businesses, households, and economic growth.
The central bank projects continued stability in asset quality, with non-performing loans (NPLs) expected to remain within manageable levels.
This positive outlook is supported by the broader economic recovery, improved business sentiment, and tighter risk management practices across the sector.
For the economy, this performance means several things. First, increased deposits and strong liquidity indicate growing trust in the banking system and a deeper financial inclusion.
Second, the rise in credit extension supports investment and consumption, which are key drivers of GDP growth. Third, the banking sector’s ability to absorb shocks and maintain stability provides a strong foundation for sustainable economic development.
In a period of global uncertainty, Uganda’s financial sector stands out as resilient, dynamic, and capable of supporting national development goals.
As the sector continues to mature, it will play a crucial role in financing infrastructure, boosting private sector growth, and reducing the economy’s reliance on external financing.
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