Lonely at the top: Five banks hold more than half of industry assets

If they do it well, they make money. If they don’t, hell breaks loose.

But here’s the catch: In 2024, a widening fault line has emerged in Uganda’s banking sector. The top five in asset base - Stanbic, Centenary, Absa, dfcu, and Equity, respectively- are dominating the market by a stretch, flexing on the scale of profits and assets. 

The rest? They are just around, picking up the loose ends and dragged down by inefficiencies, rising costs, and toxic loans.

It isn’t just a crack, but a chasm – going by a review of commercial bank financials for the year ended December 2024.

The top five hold Shs26.6 trillion in assets, which is 55.8 percent of the total industry assets value of Shs53 trillion. The industry has at least 23 banks.

A breakdown brings out the true picture, looking at how the top five banks earned their money and what sets them apart.

Stanbic – the calm giant

Think of Stanbic as the wise old elephant: big, steady, and smart enough not to charge unless it’s worth it.

With Shs10.3 trillion in assets and Shs7.1 trillion in deposits, Stanbic isn’t just leading - its way ahead of the race. A return on equity of 27.06 percent means investors are getting the crème, while its cost-to-income ratio - a lean 39.57 percent – signals serious cost discipline.

Stanbic lends out just about 62 percent of its deposits - a move that screams "risk-averse." 

Some might say it's too cautious, but that is why its non-performing loans are a manageable Shs70b. Pair that with a net interest margin of nearly 14 percent, and you have a bank that is both profitable and prudent.

With the economy tightening, liquidity and capital buffers will matter more than ever - and Stanbic’s discipline could be its best bet.

Centenary - the small giant that thinks big

If Stanbic is the elephant, Centenary is the gazelle - quick, efficient, and shockingly strong for its size. With a cost-to-income ratio of just 19 percent - the best in the industry - Centenary turns every shilling into value with the finesse of a Silicon Valley start-up.

Its return on assets of 4.82 percent is the highest currently, and it posts strong returns despite having deposits of just Shs4.2 trillion.

It’s not all sunshine, though. Centenary lends 88.1 percent of its deposits, a bold move that could sting if defaults rise. Non-performing loans already hit Shs101b last year, pointing to potential stress in the loan book.

Its efficiency is unmatched, but the bold lending strategy is a tightrope to walk. 

Absa Bank – the borrowed engine

Absa plays a different game. It’s more like a Formula 1 car - fast, but heavily reliant on external fuel. With Shs1.11 trillion in borrowings, it’s betting on cheap capital to power growth. Its loan-to-deposit ratio of 62.19 percent shows cautious lending, but non-performing loans of Shs212b - the second highest among the top five, is a warning light blinking on the dashboard.

Absa earns solid non-interest income of Shs230.2b, pointing to revenue smarts beyond traditional lending.

But with a cost-to-income ratio of 37.04 percent, it's not as cost-efficient as the giants above it.

In short, Absa’s balance sheet shows promise - but its asset quality issues could weigh it down unless it cleans up its portfolio.

Dfcu Bank – the cautious climber

Dfcu seems to be the tortoise in this race - measured, methodical, but at times painfully slow. With a loan-to-deposit ratio of just 47.1 percent, it’s playing safe. Perhaps too safe. That conservatism keeps non-performing loans low (only Shs51.8b), but it also returns an unimpressive return on assets of 2.12 percent and return on equity of 10.22 percent - well below its peers.

However, a cost-to-income ratio of 62.8 percent, seems heavy, which calls for the trimming of the operational fat by digitising aggressively, and boosting non-interest income.

Equity Bank – the risk-averse giant

Equity’s numbers tell a story of potential that is yet to be realised. Despite massive deposits, it lends conservatively (loan-to-deposit ratio: 46.43 percent) and borrows very little.

That is good news for stability, but bad news for growth. However, the bank holds the largest share of non-performing loans of Shs216b among the top five.

Combine that with a meagre return on assets of 0.59 percent and return on equity of 4.77 percent, and you get a bank that is either playing it too safe - or just slow to see opportunities. Its non-interest income sits at Shs133b, which isn’t bad, but not anywhere near the Centenary-Stanbic level.

The big picture

If this was a classroom, Stanbic and Centenary are straight-A students - smart, efficient, and balanced.

Absa and dfcu are decent, but have specific weaknesses to address - risk management for Absa, cost control for dfcu.

Equity? The bright student sitting in the back corner with untapped potential - and a bit stubborn.

The broader trend? Uganda’s top banks are entering a new phase where efficiency, digital muscle, and income diversification matter more than sheer size.

The era of fat margins from interest income alone is ending, and financial data is showing that those who are adapting are thriving, while those that aren’t have been left watching the dust.

Together, the top five banks hold 55.8 percent of industry assets - Shs26.6 trillion - leaving 18 banks to scramble over - Shs26.4 trillion - the remaining half.

How does the rear end look like?

It is a race that involves Finance Trust Bank, Exim Bank, Bank of India, Cairo Bank, and Tropical Bank, respectively.

They collectively manage just Shs2.4 trillion in assets and are struggling with weak profit positions, poor asset quality, and operational inefficiencies.

Tropical - with non-performing loans of 116.5 percent of capital - holds one of the most toxic ratios by any standards.

Not so far is Finance Trust Bank, whose loan-to-deposit ratio stands at 104.6 percent. This, in essence, means that the two banks are lending too much, which points to risky lending without sufficient deposit backing.

On the other hand, Bank of India shows some cost discipline (boasting a cost-to-income ratio of just 27.1 percent), but its return on equity of 9.4 percent and return on assets of 3.34 percent imply it’s barely squeezing juice from its capital.

Cairo Bank sits on Shs202b in equity, but only turned in Shs5.3b in profits, dragged down by a credit risk nightmare of non-performing loans of 53 percent of capital, while Exim Bank rounds out the pack with a low return on equity of 2.6 percent and non-performing loans of 51.2 percent.

Salaam Bank could have made it onto the list, given its asset base of Shs156b - the lowest among the tier-one banks.

However, since it only began operations in March last year, comparing it to banks that have spent decades building their portfolios would be like racing a bicycle against a bullet train.

That said, for a newcomer, its asset base is nothing short of impressive.

Top banks by assets

A split banking landscape

The sector is now running at two speeds: agile, capital-rich leaders pulling ahead, and foot-draggers struggling to keep pace. 

For the bottom tier, staying afloat in a high-capital, tech-driven environment is no longer just about solvency, something that demonstrates that survival in Uganda’s banking future demands more - you have to be smart, fast, and digitally fit.

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