Tanzania's banking sector remains strong, says new report

Feb 03, 2016

The sector's asset quality has improved.

Tanzania's banking sector "remains strong" and has been performing well in recent years, according to a financial analysis from KCB Tanzania.

It said that the country's banking sector has robust levels of capital adequacy, above the regulatory requirement of 12.5 per cent.

Banking asset quality has improved, with the ratio of non-performing loans (NPLs) to total loans decreasing from 8.5 per cent in September 2014 to 6.5 per cent in March 2015.

Meanwhile, banking assets increased by 12.4 per cent to Sh26.35 trillion (€11 billion) in September 2015 compared with March the same year.

The report also found that the funding structure of the local banks was strong, with the loan-to-deposit ratio increasing by 78 per cent in 2015 compared to its five-year average of 69 per cent.

"This implies that Tanzania's banks are predominantly domestically funded, less reliant on external financing, and thus less exposed to external shocks," said the statement seen by newspaper The Citizen.

However, the reports forecasts that lenders will remain relatively risk averse in the coming quarters due to tighter monetary conditions and economic uncertainty.ADNFCR-2976-ID-801811687-ADNFCR