Non performing loans jump to 10 pc in Tanzania banking
The quality of the banking sector’s assets in Tanzania deteriorated after the ratio of non-performing loans to gross loans (NPLs), recorded an increase of 2.6 per cent to 10.8 percent at the end of April 2017 from 8.2 percent recorded at the end of April 2016.
The Bank of Tanzania monetary policy statement for June has said the central bank has continued to implement prudential measures to strengthen risk management practices in the financial sector and has directed banks with high NPL ratios to formulate and implement strategies to bring the ratio to at most 5 percent, and encouraged them to increase use of the existing credit reference system to reduce risks.
The central bank has also directed banks to maintain capital conservation buffer and implement capital charge over operational risk, with effect from August 2017.
During the period under review, clearing, payment and settlement systems continued to operate efficiently with general increase in access and usage.
The statement shows that during the year ending April 2017, the banking sector continued to grow with new institutions starting business and the existing institutions increasing their outreach.
The sector has remained sound, stable and profitable with levels of capital and liquidity generally above regulatory requirements.
During July 2016 to April 2017, liquidity condition in the banking system remained relatively tight especially during the first half of the year, largely attributed to cumulative impact of substantial decline in net foreign budgetary inflows and transfer of public institutions’ deposits to the Bank of Tanzania.
"Tight liquidity situation was reflected in the sustained slowdown in the growth of monetary aggregates, notably the broad money supply and credit to the private sector, which grew by 3.8 percent and 3.4 percent respectively during the year ending April 2017, compared with 12.9 percent and 19.3 percent recorded in the corresponding period in 2016," the central bank says.
Growth of monetary aggregates also remained well below their respective targets for end June 2017.
The impact of the slow growth in monetary aggregates was partly dampened by gradual rise in velocity of money circulation and money multiplier on the back of financial innovations especially the enhanced use of mobile financial services which has been boosted by interoperability across network operators.
The Bank of Tanzania monetary policy statement for June has said the central bank has continued to implement prudential measures to strengthen risk management practices in the financial sector and has directed banks with high NPL ratios to formulate and implement strategies to bring the ratio to at most 5 percent, and encouraged them to increase use of the existing credit reference system to reduce risks.
The central bank has also directed banks to maintain capital conservation buffer and implement capital charge over operational risk, with effect from August 2017.
During the period under review, clearing, payment and settlement systems continued to operate efficiently with general increase in access and usage.
The statement shows that during the year ending April 2017, the banking sector continued to grow with new institutions starting business and the existing institutions increasing their outreach.
The sector has remained sound, stable and profitable with levels of capital and liquidity generally above regulatory requirements.
During July 2016 to April 2017, liquidity condition in the banking system remained relatively tight especially during the first half of the year, largely attributed to cumulative impact of substantial decline in net foreign budgetary inflows and transfer of public institutions’ deposits to the Bank of Tanzania.
"Tight liquidity situation was reflected in the sustained slowdown in the growth of monetary aggregates, notably the broad money supply and credit to the private sector, which grew by 3.8 percent and 3.4 percent respectively during the year ending April 2017, compared with 12.9 percent and 19.3 percent recorded in the corresponding period in 2016," the central bank says.
Growth of monetary aggregates also remained well below their respective targets for end June 2017.
The impact of the slow growth in monetary aggregates was partly dampened by gradual rise in velocity of money circulation and money multiplier on the back of financial innovations especially the enhanced use of mobile financial services which has been boosted by interoperability across network operators.
Maoni
Chapisha Maoni