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The sector delivered a record performance in 2024, with industry-wide net profits surging 16% year-on-year to Shs1.6 trillion
Kampala, Uganda | THE INDEPENDENT | Uganda’s banking sector delivered a record performance in 2024, with industry-wide net profits surging 16% year-on-year to Shs1.6 trillion ($420 million), buoyed by improved cost structures, asset quality, and digital transformation across top-tier banks.
The sector’s robust profitability highlights its resilience amid shifting macroeconomic conditions and evolving regulatory demands. The performance was driven largely by five dominant institutions, which together accounted for 74.5% of total industry profits.
Stanbic, Centenary, Absa lead gains
Stanbic Bank Uganda retained its position as the market leader, posting a net profit of Shs486.82 billion, up 15.5% from 2023. The lender, a subsidiary of South Africa’s Standard Bank Group, maintained a strong cost-to-income ratio of 47.2% and recorded total revenues of Shs1.3 trillion—an 11.8% compound annual growth rate. The bank’s strategic focus on agriculture financing and women entrepreneurship through its Stanbic4Her initiative contributed significantly to its earnings.
Centenary Bank followed closely, with net profit increasing 15.2% to Shs342.28 billion. The institution’s microfinance-led model and continued investment in digital banking channels have helped consolidate its position as the country’s leading indigenous bank.
Absa Bank Uganda posted a 22% year-on-year rise in net profit to Shs177.8 billion, attributing the performance to disciplined strategic execution and a pivot towards customer-centric service delivery.
Bank of Baroda Uganda also saw strong results, registering a 15.1% profit increase to Shs133.95 billion, supported by a conservative operational model and consistent client engagement.
Meanwhile, dfcu Bank more than doubled its profit, delivering a dramatic 120.8% jump to Shs75.13 billion, helped by a decline in non-performing assets and a shift towards high-yield government securities.
Mid-Tier players post mixed results
Outside the top five, mid-sized banks delivered varied outcomes. Citibank Uganda’s profit grew modestly by 5.3% to Shs71.91 billion, while Housing Finance Bank recorded an 11.3% rise to Shs71.13 billion, with both banks citing gains from digital transformation and revenue diversification.
NCBA Bank Uganda entered the top ten for the first time after delivering a 44.2% profit surge to Shs38.9 billion, aided by growth in digital lending. PostBank Uganda registered a 28.4% profit increase to Shs35.35 billion.
In contrast, KCB Bank Uganda saw a marginal drop in earnings to Shs29.94 billion. Combined, the top ten banks captured 89.6% of the sector’s total profits, underlining a continued concentration of earnings among larger institutions.
Smaller banks face profitability headwinds
Among smaller lenders, Bank of Africa Uganda held steady with Shs25.6 billion in profit. I&M Bank Uganda posted a 76.3% increase to Shs20.27 billion, citing capital injections and improved credit risk management. Equity Bank Uganda returned to profitability with Shs20.14 billion after a loss in the prior year.
By contrast, Standard Chartered Bank Uganda saw net profits fall 76.2% to Shs19.09 billion following the divestment of its retail and wealth operations, while Diamond Trust Bank Uganda recorded a 42.1% profit decline to Shs23.74 billion.
Other banks, including Ecobank Uganda, Finance Trust Bank, United Bank for Africa Uganda, and Exim Bank Uganda, remained profitable but held less than 2% of the market’s earnings share each, with profits ranging from Shs3.94 billion to Shs16.45 billion.
The sector also experienced regulatory recalibration. Three institutions—ABC Capital Bank, Opportunity Bank, and Guaranty Trust Bank Uganda—opted to downgrade from Tier I commercial bank status to Tier II credit institutions after failing to meet the Bank of Uganda’s new minimum capital requirement of Shs150 billion. Tier II institutions are only required to maintain Shs25 billion in paid-up capital.
The central bank’s move is part of a broader effort to strengthen the banking system’s capital base and improve resilience.
2025 Outlook
Looking ahead to 2025, industry executives remain cautiously optimistic. Growth is expected to stem from increased activity in oil and gas, agriculture, ICT, health, manufacturing, and infrastructure.
Key strategic priorities for most banks include balance sheet optimization, cost efficiency, non-interest income generation, digital innovation, and sustainability.
Risk management will remain central amid upcoming general elections in 2026, which could present both opportunities and uncertainties for the financial services sector.
