Sub-Saharan Africa : Moody's sees strong growth prospects for banking sector
Banks' assets have risen by more than 15 per cent annually over the past four years.Sub-Saharan Africa's fast-expanding banking sector has strong potential to continue its recent growth trend, boosted by robust economies and widening financial inclusion, Moody's Investors Service said in a report published on Tuesday (May 19th).
The rating agency found that investors are increasingly interested in Sub-Saharan African banks, whose assets have risen by more than 15 per cent annually over the past four years.
"We expect Sub-Saharan banking systems to continue expanding strongly over the next 12 to 18 months, helped by robust economic growth and greater banking penetration on the back of the growing accessibility of mobile banking." said Constantinos Kypreos, co-author of the report.
However, while the growth potential is strong across the sub-Saharan region, the banking systems will likely develop unevenly and feature varying degrees of volatility in credit quality.
The sector faces challenges such as fiscal vulnerability, domestic security risks, corruption, high poverty rates and infrastructure bottlenecks.
"Where such weaknesses exist, they can have a negative impact on banking sector growth and compromise their credit profile," said Mr Kypreos.
"Despite these challenges, the banks' high capital buffers and strong earnings generating capacity support financial stability and provide room to support growth and loss-absorption."