Uganda’s financial system remained sound and resilient in FY 2024/25, characterized by strong capital and liquidity buffers, improved asset quality, and enhanced profitability, the Bank of Uganda (BoU) has reported. The ratio of non-performing loans (NPLs) declined notably to 3.7% from 4.9% in the previous year, reflecting improved borrower repayment capacity and effective risk management by supervised institutions.
The banking industry’s total assets grew by 13.7% to UGX 61.3 trillion, driven largely by a 16% increase in government securities holdings, which reached UGX 17.4 trillion, reflecting strategic liquidity management. Customer deposits, a key indicator of public confidence, increased by 14.2% to UGX 41.6 trillion.
Liquidity in the sector remained robust, with liquid assets rising by 33.4% to UGX 23.1 trillion. The Liquid Assets to Deposits ratio improved to 56.4%. Regulatory ratios were comfortably met, with the Liquidity Coverage Ratio (LCR) at 488.7% and the Net Stable Funding Ratio (NSFR) at 218.8%, both well above the regulatory minima.
The core Capital Adequacy Ratio (CAR) improved to 25%, with all subsectors exceeding regulatory minimums. All Domestic Systemically Important Banks (DSIBs) met systemic risk buffer requirements, underscoring the sector’s resilience. The sector’s aggregate Net Profit After Tax (NPAT) saw a substantial 38% increase to UGX 1.9 trillion, supported by a 10.7% rise in interest income and significant reductions in expected credit losses.
The BoU strengthened its supervisory framework throughout the year. It fully operationalized the Financial Institutions (Liquidity) Regulations 2023, making compliance with LCR and NSFR a prudential requirement. It also issued new guidelines on Cyber and Technology Risk Management and integrated Environmental, Social, and Governance (ESG) risk assessments into its supervisory processes.
To test the sector’s resilience, the BoU conducted its first successful Bottom-Up Stress Test (BUST) for DSIBs and spearheaded a Financial Sector Crisis Simulation Exercise in collaboration with the Financial Sector Stability Forum. These exercises confirmed that the sector is broadly prepared to handle system-wide stress, though a few institutions were identified for enhanced monitoring.
Looking ahead, the BoU plans to operationalize macroprudential tools targeting credit concentration risk and an updated Loan-to-Value (LTV) framework for mortgage lending to further mitigate risks in the evolving financial landscape.
