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.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
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.<\/p>\n","protected":false},"excerpt":{"rendered":"
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 […]<\/p>\n","protected":false},"author":8864,"featured_media":40980,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":[],"jnews_primary_category":[],"jnews_paywall_metabox":[],"jnews_override_counter":[],"footnotes":""},"categories":[101,822,98],"tags":[167,9374,9372,9373,109,119],"class_list":["post-40979","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-markets","category-news","tag-bank-of-uganda","tag-capital-adequacy-ratio","tag-liquidity-coverage-ratio","tag-net-stable-funding-ratio","tag-news","tag-uganda-news"],"yoast_head":"\n