Liberia: Profitability remains a "major challenge" to the banking sector, says CBL

Jan 27, 2016

Banks have relatively high operating expenses, according to the central bank.

Profitability remains a "major challenge" to the banking sector, according to the latest financial and economic bulletin from the Central Bank of Liberia (CBL) seen by LINA news agency.

It pointed at the poor quality of banks' assets, a weak credit administration, as well as banks' relatively high operating expenses.

"Despite these challenges, the banking system continues to be well-capitalised and liquid, reflecting the continuous public confidence in the system," the bulletin noted.

Between the second and the third quarter of 2015, seven of the nine banks in the country showed growth in total assets, while two banks experienced negative growth.

Over the same period, the banking sector's deposits, gross loans and capital increased by 3.2 per cent, 11.6 per cent and 5.6 per cent, respectively.

Banks are still recovering from the Ebola crisis. Last year, the CBL offered a relief package, waiving default charges and extended repayment periods on loans, and also paid off outstanding loans taken by schools that were forced to close.

Repayment periods for all lenders that received funds linked to previous central bank stimulus initiatives have been extended by two years and interest rates reduced to two per cent from three per cent.

Governor Joseph Mills Jones said the impact of the disease resulted in Liberian banks’ total assets declining by 2.7 per cent between June and October 2014 as deposits fell by 2.8 per cent, and that loans and advances dropped 7.2 per cent, with lenders’ total capital down 4.2 per cent over the same period.ADNFCR-2976-ID-801811061-ADNFCR