THE banking sector in Tanzania continues to exhibit robust financial stability thanks to the maintenance of healthy capitalisation in the financial sector, Tanzania Bankers Association (TBA) has said.
The association identified six major indicators including the notable investor’s confidence due to conducive business environment, banking innovative solutions and economic recovery from Covid-19, attributed to the profitability growth.
TBA’s Executive Director Ms Tusekelege Joune said over the weekend that member banks have maintained healthy capitalisation and adhered to stringent risk management practices which pushed for overall control of the financial system.
“The banking business in the country has been quite impressive due to numerous measures implemented by the banks to enable the business to flourish,” Ms Joune told journalists when commemorating the customer service week.
She also said that lenders’ innovative solutions in serving customers and developing client-focused products for consumers also attributed to the increased demand for banking services.
She added that asset quality has also improved with the ratio of non-performing loans (NPLs) decreasing to 5.5 per cent in April from 7.8 by last June.
The improvement is due to various implementations of policy reforms as part of implementing the blueprint for regulatory reforms to improve the business environment.
Moreover, she highlighted the economic recovery from Covid-19, fewer NPLs, increased demand for financial services, the banks’ innovative solutions as other factors attributing to the stability.
Additionally, she stressed that the quality of loan portfolios across the banking sector remains sound attributed to prudent lending practices and ongoing risk assessments that enabled banks to maintain a low rate of NPLs.
“The banking sector has continued to play a critical role in enabling borrowers to acquire needed funds for their diverse economic activities,” stressed Ms Joune.
On top of that, the overall lending and negotiated rates averaged around 15.96 per cent by June this year, almost similar to the rates registered in the corresponding quarter last year.
According to the Bank of Tanzania (BoT) quarterly report for June this year negotiated deposit rates averaged 9.18 per cent by June this year which is slightly below 9.32 in March. The rate was 9.6 per cent last June.
The monetary policy statement released by the central bank in June showed the core capital adequacy ratio was 19.6 per cent which is above the minimum regulatory requirement of 10 per cent.
Speaking on sustainable finance and sustainable banking practices, Ms Joune said the positive performance experienced by the banking industry in first half (H1) this year, has translated into a significant socio-economic impact and contribution to the country.