Banking sector loans grew 5,56%

Published: 01 August 2013

TOTAL banking sector loans and advances increased by 5,56 percent from $3,401 billion in January to $3,59 billion in May.

According to the 2013 mid-term fiscal policy statement presented by Finance Minister Tendai Biti last week, five banking institutions accounted for 20 percent of total banking sector loans and advances

"Loans to individuals accounted for 22 percent of total banking sector loans as at 31 May 2013, as most banks are offering salary-based loans. This was followed by services 18 percent, manufacturing 16 percent and agriculture 15 percent," he said.

The level of non-performing loans has been on an upward trend from 1,8 percent as at December 2009 to 13,78 percent as at 31 March 2013.

Minister Biti said the deterioration in assets quality was largely attributable to poor loan origination and underwriting standards.This siphoned banks of resources through non-performing insider and related party loans and poor risk management systems.

Banking sector deposits grew from $703 million in 2009 to $4,43 billion as at 31 May 2013.

"During the period under review, total banking sector deposits increased by 5,3 percent from $4,2 billion in January 2013 to $4,43 billion as at 31 May 2013. Of the $4,43 billion deposits, 71 percent is held by the top eight banking institutions," said Minister Biti.

He said since January this year, the major sources of deposits have remained unchanged with corporates contributing 50,65 percent followed by banking institutions and individuals with 16,33 percent and 14,34 percent respectively.

Demand deposits also decreased in March, declining by $14,8 million, to $1 965 million.

"Liquidity constraints, as well as withdrawal of deposits in the banking system underpinned this decline," he said.

In terms of capitalisation of the banking industry as at 31 March 2013, Minister Biti said twelve out of 21 operating banking institutions were in compliance with the 31 December 2012 prescribed minimum capital requirements of $25 million.

"The Reserve Bank will continue to monitor implementation of banking institutions' recapitalisation initiatives," he said.
- chronicle