Kampala, Uganda — The Bank of Uganda’s Integrated Annual Report for the year ending June 30, 2025, paints a positive picture of Uganda’s banking industry, highlighting strong growth in assets, improved asset quality, and robust profitability across the sector.
According to the report, total banking sector assets increased by 13.7 percent, rising to Shs61.3 trillion from Shs53.9 trillion in June 2024. Much of this increase was driven by the sector’s elevated holdings in government securities, which rose by 16 percent to Shs17.4 trillion — a reflection of strategic liquidity management by banks.
Customer deposits also saw healthy expansion, growing by 14.2 percent to Shs41.6 trillion, up from Shs36.4 trillion the previous year. The central bank attributes this to increased foreign currency purchases and greater public confidence in the banking system.
Liquidity across the sector improved markedly: liquid assets climbed by 33.4 percent to Shs23.1 trillion, pushing the liquid assets to deposits ratio to 56.4 percent. The report underscores that key liquidity ratios—such as the Liquidity Coverage Ratio (LCR) at 498.7 percent and the Net Stable Funding Ratio (NSFR) at 184 percent—remain well above regulatory minimums.
Credit to the private sector also saw moderate growth, with loans and advances rising by 9.2 percent in 2025, up from 6.8 percent the prior year. Although this was the strongest growth in three years, it remains below the long‑term target of 13.5 percent.
On the quality of assets, the sector recorded improvements: non-performing loans (NPLs) declined, bringing the NPL ratio down to 3.7 percent in 2025 from 4.9 percent a year earlier. The stock of non-performing loans fell to Shs881.6 billion, and expected credit losses (ECLs) decreased to Shs761.2 billion, signaling better repayment behavior and risk management.
Profitability surged as well: aggregate net profit after tax (NPAT) increased by 36 percent to Shs1.9 trillion from Shs1.4 trillion, supported by a 10.7 percent rise in interest income and reductions in provisioning. The report notes that the sector’s return on assets rose to 3.3 percent, and the Core Capital to Risk‑Weighted Assets Ratio (CAR) improved to 25 percent, with all key subsectors surpassing regulatory minima.
The central bank also observed reduced reliance on its Standing Lending Facility (SLF), indicating that banks are better able to manage overnight liquidity demands internally. Overall, the report concludes that Uganda’s banking sector remains stable, resilient, and well‑positioned to support future growth.
