Uganda’s banking sector doesn’t scream success. It doesn’t thump its chest or light up headlines. But make no mistake: it is quietly, efficiently, and methodically winning.
The numbers from the Uganda Bankers Association’s 2024 report are hard to ignore. Total assets for the sector reached sh48.2trillion, up nine percent from sh44.3trillion in 2023. Net profits after tax came in at sh1.58trillion—the highest in the sector’s history—rising from sh1.45trillion a year earlier.
At first glance, this looks like a continuation of the same old story: steady growth, strong balance sheets, healthy profits. But dig a little deeper, and you’ll see a sector entering a new phase. One where scale isn’t enough. Where efficiency, caution, and digital fluency are now the currency of banking success.
Start with the deposits. Total customer deposits grew to sh39.8 trillion
, a shade over eight percent from 2023’s sh36.8 trillion. The local currency still dominates, accounting for 69.8 percent of all deposits, but that’s down from 72.4 percent the previous year. It’s a gentle signal—nothing alarming yet—that confidence in the shilling is softening at the margins. With government borrowing still crowding out the private sector and the exchange rate under pressure, depositors seem to be hedging their bets.
Then there’s the loan book. Loans and advances to customers ticked up to sh22.3trillion, up from sh20.7trillion in 2023. A respectable 7.7 percent increase. But it’s where the money is going that matters. Trade continues to eat the lion’s share at 20.9 percent, followed by personal loans, building and construction, and manufacturing. Agriculture, despite being the lifeblood of the economy, still only claims 8.3 percent of the loan pie. That’s a structural failure, not just a commercial decision.
Meanwhile, the cracks are starting to show. The Non-Performing Loan (NPL) ratio nudged upwards to 5.3 percent, from 4.9 percent last year. In absolute terms, NPLs now stand at sh1.18 trillion
, up from sh1.01 trillion. And while banks are beefing up their provisioning—sh515.2 billion set aside for bad debts, up 14.5 percent the deterioration in asset quality is a clear warning. This isn’t a crisis. But it is a reminder: growth without rigour is just a risk postponed.
And yet, despite it all, banks are thriving. Their capital base grew by 12.6 percent—from sh6.12 trillion to sh6.89 trillion—bolstered by profits and, in some cases, fresh capital injections. That’s not just a regulatory requirement. It’s a strategic decision. With the government scaling back its borrowing appetite and returns on treasury paper likely to flatten, banks are turning back to their core business: financial intermediation.
But here’s the catch.
The industry is still highly concentrated. The top five banks—Stanbic, Centenary, ABSA, Standard Chartered, and Equity—hold over half the assets and profits. The rest of the sector is jostling for relevance. And while smaller banks are growing quickly, they’re still playing catch-up. The market remains skewed, with smaller players struggling to break out of their niche comfort zones.
Digitisation, meanwhile, has gone from buzzword to baseline. Mobile and internet channels now dominate transaction volumes. The branches haven’t disappeared—but they’ve changed. They’re leaner, meaner, and no longer the centre of the banking universe. The upside? Lower costs, faster service, broader reach. The downside? Digital fraud, customer alienation, and growing concerns about transaction fees—especially for low-income users who don’t understand the fine print until it’s too late.
Still, the shift is irreversible. And the banks that have invested early in systems, security, and customer education are now reaping the benefits. They’re not just pushing apps—they’re building ecosystems. From payments and savings to insurance and microloans, the smartphone is fast becoming Uganda’s de facto bank branch.
And yet, the elephant in the room refuses to budge: cost-to-income ratios. Despite all the innovation, the sector’s average sits stubbornly above 50 percent. That’s high by regional standards and leaves little room for error if interest margins tighten. It also means banks will continue to pass costs onto customers—whether through fees, spreads, or service limitations.
So what does all this mean?
It means Uganda’s banking industry is in transition. From analogue to digital. From scale to efficiency. From top-line growth to bottom-line discipline. The profitability is real, but so is the fragility. The sector is walking a tightrope—between opportunity and exposure, between transformation and turbulence.
The Bank of Uganda has done a solid job of macroprudential supervision. Liquidity levels are healthy. Capital adequacy ratios are being met. And there’s no sign of systemic stress. But if the regulator wants to future-proof the industry, it will need to think beyond compliance. How can capital be channelled into productive sectors? How can banks be nudged to lend more to agriculture, to green energy, to local manufacturing? And how do we ensure that banking becomes a tool for transformation, not just transaction?
Because here’s the uncomfortable truth: for all their profits, banks are still not lending enough to the sectors that matter most.
And that’s not just a policy challenge. It’s a commercial opportunity.
There is money to be made in lending to agro-processing, to SMEs, to women-led enterprises. But it requires different tools, different risk models, different appetites. It requires banks to reimagine what it means to serve—not just the salaried, but the self-employed. Not just the formal, but the informal. Not just the central, but the peripheral.
Uganda’s banks, in 2024, are more profitable than ever. More digital than ever. More capitalised than ever.
But are they more inclusive? More developmental? More catalytic?
That’s the next frontier.
