Africa-Press – Eswatini. Banking sector assets marginally grew by 0.6 per cent to E26.3 billion. Credit growth started picking up in the year to June 2023, signalling potential recovery.
Annually, commercial banks’ gross loans and advances grew by 7.2 per cent to E15.2 billion, which was higher than the 6.6 per cent growth registered in the year ended June 2022.
On a quarterly basis, banks’ gross loans and advances increased by 3.0 per cent over the quarter ended June 2023. By sector, annual growth in credit to the personal and household loans was 2.3 per cent; mining and quarrying was 103.5 per cent; real estate was 48.4 per cent; manufacturing was 28.6 per cent; distribution and tourism was 9.5 per cent; and transport and communications was 6.2 per cent.
In contrast, lending to the construction and agriculture and forestry contracted by 26.2 per cent and 8.4 per cent, respectively. Lending to service sectors, including education and hospitality, remained subdued due to shocks associated with the COVID-19 pandemic. Investment in government securities decreased by 6.2 per cent to total E4.0 billion. Banks registered a decline in customer deposits of 6.1 per cent from E20.3 billion to E19.1 billion over the year ended June 2023, due to the slow pace of economic recovery. However, total shareholders’ funds increased by 5.4 per cent to stand at E3.9 billion.
According to the central bank, on aggregate, the banking sector held strong capital buffers in the year to June 2023, maintaining resilience to potential shocks. The aggregate core capital-to-risk weighted assets and total capital adequacy ratios were 15.9 per cent and 18.0 per cent respectively as at June 2023, well above their respective statutory minimum of 4.0 per cent and 8.0 per cent. There was an increase in the capital adequacy ratios (CARs) as at end June 2023, when compared to the previous year positions and this is attributable to improvements in the banking sector’s earnings and profitability. This resulted in the capital adequacy index remaining relatively stable.
profitability improved
Overall, banking sector earnings and profitability improved in the year to June 2023. The annual net profit after-tax for commercial banks increased from E554.3 million to E671.4 million reported in the year to June 2023. This was a result of interest rates remaining relatively high and improved economic activity. The average cost-to-income (efficiency) ratio for all banking institutions remained unchanged at 75.3 per cent, due to banks containing operational costs. The average return on banks’ total assets (ROA) increased from 2.1 per cent in June 2022 to 2.6 percent in June 2023. Return on total equity (ROE) also improved from 15.1 per cent to 17.3 per cent during the period under review. On the other hand, banks’ overheads-to-income ratio improved from 54.6 per cent in June 2022 to settle at 47.7 per cent in June 2023.
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