Tanzania: High Non-Performing Loans May Derail Growth

May 01, 2017 | Tanzania Daily News; All Africa

Issues of NPLs and costs efficiency are related in several ways with general belief that failing banks tend to be located far from the best practice.

Presently most bank's quarterly audited financial reports indicate that these banks are experiencing high levels of non-performing loans (NPLs) ranging from four per cent to 50 per cent with averaged increase from 6.4 to 9.5 per cent when figures are placed in perspective. Issues of NPLs and costs efficiency are related in several ways with general belief that failing banks tend to be located far from the best practice. While there is no suspicion on positive relationship between assets quality and costs efficiency that most of our banks are drawn in. There are broad consensus on the view that high NPL levels ultimately have a negative impact on bank but as well as lending to the economy resulting to the balance sheet quality, profitability and capital restraints. While in the contemporary years, studies on bank competence have taken in account asset quality specifically NPLs as a measure of bank's performance, our bank's current NPLs need decisive exit strategy from both a macro-prudential and a micro-prudential perspective. Read more on All Africa. Source:
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