Africa-Press – Eswatini. The Central bank of Eswatini (CBE) has expressed concern over the increase in non – performing loans (NPL) from credit extended to households.
The NPL ratio for the industry currently stands at 7.3 per cent.
According to CBE Monetary Policy statement, credit extended to households stood at E8.1 billion at the end of July 2023 depicting a marginal month?on?month decline of 0.3 per cent.
It said the month-on-month contraction was observed in other personal (unsecured) loans which fell by 1 per cent to E3 billion and motor vehicle loans, which fell by 0.7 per cent to E975.1 million.
The statement further highlighted that housing loans, on the other hand, grew by 0.3 per cent to E4.1 billion at the end of July.
CBE Governor Dr Phil Mnisi said they were pleased with the increase shown by credit extended by banks over the past two months.
“This will grow the economy,” said Mnisi.
The governor explained that it was an indication that the monetary policy encouraged credit extension.
“However, what is concerning is the non-performing loans which show an increase,” said Mnisi.
He said the bank was however hopeful that it would contract in due time.
“We are hopeful that the ratio will contract because the monetary policy is still accommodative at this time,” said Mnisi.
Pressure
He highlighted that the bank eased interest rates by 25 basis points in July, in a bid to lessen the pressure and burden of repaying loans.
“This has positively increased the uptake of lending in the country, which is good,” said Dr Mnisi.
Mnisi elaborated on some of the reasons behind household’s inability to repay loans.“It could be because people are already tight and it is true, interest rates were very high and people have been experiencing a tighter money situation,” said the governor.
Mnisi further highlighted that the introduction of a monetary position had a transmission effect.
“It is to say that it may take a little while before it can be felt,” said Mnisi.
He explained that the two months since the ease of interest rates was not enough to make an accurate judgment on whether people had readjusted in terms of repaying their loans.
The governor said a true picture would come after households have had the opportunity to meet with their banks to restructured their loans and negotiate with their respective lenders.
“We need six months to make an accurate judgment,” said the governor.
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