THE average ratio of non-performing loans (NPL) to total advances rose marginally in three months to March as the weak economy militated against borrower's ability to repay.
However in spite of this, banks made a profit in the period at
NPL to total loans increased to 17 percent in the quarter to March from 16 percent as at
"This trend is partly a reflection of macroeconomic challenges that have militated against borrowers' ability to service loans," said the central bank.
At the end of the quarter, banking sector was capitalised to the tune of
Core capital diminution was largely attributed to losses incurred by the non compliant banks during the quarter.
A total of 14 out of 20 operating banking institutions were in compliance with the prescribed minimum capital requirements.
The compliance levels are the same as at
The RBZ said non-compliant banks were taking various measures to regularise their capital positions which are at different stages of implementation.
"The banking sector remained adequately capitalised during the period ended
Of the loans and advances, commercial banks accounted for 92,73 percent of total banking sector loans and advances.
The top five banks had loans and advances amounting to
The central bank noted that lending portfolio was skewed towards consumptive lending at the expense of productive sectors of the economy. In terms of financial performance, the sector was profitable, with an aggregate net profit of
"Generally, banks that recorded losses lacked critical mass to generate sufficient revenue and cover operating costs," said the RBZ.
"The losses were mainly attributable to credit impairment in a market characterised by increased loan delinquencies, balance sheet structures which are skewed towards non-interest earning assets, largely a reflection of non- liquid capital, high funding costs and operational expenses."
Deposits continued to be dominated by demand deposits which accounted for 57,92 percent of total deposits.
In terms of concentration, the commercial banking sub-sector dominated the market for deposits, controlling 84 percent of deposits.
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