Guaranty Trust Bank (Uganda) Limited has reported its first loss in over five years, highlighting the difficult transition it is facing after downgrading to a Tier II Credit Institution in 2024. The bank posted a net loss after tax of UGX 3.25 billion for the year ended December 31, 2024, reversing a net profit of UGX 1.64 billion recorded in 2023.
The downgrade followed a sharp increase in minimum capital requirements imposed by the Bank of Uganda (BoU) in 2022, raising the threshold for commercial banks from UGX 25 billion to UGX 150 billion. Facing the steep capital demands, Guaranty Trust Bank Uganda — alongside Opportunity Bank and ABC Capital Bank — opted to reclassify as a Tier II institution in March 2024.
The bank’s 2024 financial results point to a convergence of pressures that undermined performance.
Shrinking Deposits and Asset Base Undermine Growth
Total assets declined by 9.9%, dropping from UGX 238.88 billion to UGX 215.28 billion, while customer deposits fell sharply by 10%, from UGX 186.28 billion to UGX 167.44 billion. The deposit contraction significantly constrained the bank’s ability to grow income-generating assets, forcing a pullback in both lending and investment activities. Loans and advances to customers declined by 16.6% to UGX 46.54 billion, while investment in securities — historically a key income stream for the bank — fell by 16.1% to UGX 85.60 billion.
Although the bank managed a 4.4% rise in total income to UGX 32.43 billion, largely supported by stable returns from government securities and growth in non-interest income such as fees and commissions, this was insufficient to offset the scale of challenges on the cost side.
Heavy Provisions and High Costs Push the Bank into Loss
A major factor was a surge in credit provisioning. Although non-performing loans (NPLs) actually declined from UGX 14.89 billion in 2023 to UGX 3.38 billion in 2024 — largely due to aggressive write-offs — the bank had to absorb UGX 7.20 billion in bad debts written off during the year. This resulted in a sharp increase in provisions for bad and doubtful debts, rising to UGX 7.40 billion in 2024 compared to a small recovery of UGX 91 million in 2023.
Operationally, the bank’s cost base remained elevated. Personnel-related costs totaled UGX 8.03 billion, while operating and other expenses combined to over UGX 11.5 billion, reflecting limited progress in adjusting the cost structure to the smaller business footprint after the downgrade.
Irene Mwoyogwona: Beyond the Numbers – How Pride Bank's Award-Winning CFO Combines Profitability and Social ImpactInterest margins also remained tight. Income from loans and advances fell by UGX 1.06 billion to UGX 9.00 billion, reflecting reduced lending activity. Although interest income from investment securities remained relatively stable at UGX 11.68 billion — buoyed by generally higher government bond yields — the benefit was not enough to counterbalance shrinking customer loan income and continued high deposit interest costs.
Overall, the sharp fall in customer deposits starved the bank of the raw material it traditionally used to lend and invest, squeezing income potential. Meanwhile, high credit provisioning, heavy operating expenses, and compressed lending margins combined to push the bank into a bottom-line loss.
Complex Recovery Ahead
Guaranty Trust Bank Uganda Ltd, incorporated in 2013 following Guaranty Trust Bank Kenya’s acquisition of a controlling stake in FINA Bank Group, is a subsidiary of Guaranty Trust Holding Company PLC (GTCO) — one of Nigeria’s leading financial services groups with over 300 branches across Nigeria and subsidiaries in The Gambia, Ghana, Liberia, Sierra Leone, Côte d’Ivoire, Tanzania, Kenya, Uganda, Rwanda, and the United Kingdom.
In Uganda, the bank operates seven branches and cash centers offering retail and wholesale financial services to individuals, corporates, and institutions. However, despite the regional backing, Guaranty Trust Bank Uganda has remained a relatively small player in a market dominated by a few large institutions — with the top five banks controlling nearly 60% of total banking sector assets.
Looking ahead, the bank’s path to recovery will likely depend on its ability to rebuild deposit volumes, carefully manage credit risk, sustain non-interest income growth, and execute deeper cost efficiencies. With its operational flexibility now somewhat limited under the Tier II licensing framework, Guaranty Trust Bank Uganda faces a slower and more complex journey back to profitability in the coming years.
