Covid-19 a blessing in disguise for banks: UDSM scholar 

BANKS have managed to navigate Covid-19 headwinds successfully after going digital in offering services in a bid to protect society while keeping operations steady.

The digital transformation assisted banks to make profits during the pandemic but led to a closure of 111 physical branches while cutting down the number of jobs from 16,858 to 13,231 in 2020/2021.

The University of Dar es salaam’s Business School (UDBS), Dr Tobias Swai said the success was “a blessing in disguise” after banks find a niche market through digital technology during the Covid-19 pandemic.

“The banking sector recorded its highest profit in 2021 which was the highest for the past seven years, based on the available data.

“The total profit after tax that was made in 2021 by all commercial banks in Tanzania combined amounted to 650.6bn/-,” Dr Swai said when presenting a paper: Bank Performance Post Covid-19 Analysis during banking finance and investment forums organised by UDBS.

The digital platform ever since managed to increase performance and reached many customers, especially in rural areas due to service simplicity.

“Unlike in the past where rural dwellers were struggling to access banking services, using digital technology and bank agents have narrowed that gap,” Dr Swai said.

The analysis is based on 10 quarters before and after the spreading of the pandemic in the country in March 2020.

The study showed that interest margin, which measures the profitability of a bank, reached the all-time highest level of 78.4 per cent equalled to 2.087tri/- in 2021 since 2015.

The country’s total deposits for 43 registered banks represent 40 per cent of GDP while total loans dished out were 20tri/- in 2021.