Maputo, 1 Jun (AIM) – The Bank of Mozambique, in its role as regulator of the national financial system, has announced that the country’s commercial banks continue to face a growing problem relating to payment defaults by customers, both individuals and businesses.
In a report on Prudential and Economic-Financial Indicators, which covers the first quarter of this year, the Central Bank points out that 14.47 percent of the credit granted by the Commercial Investment Bank (BCI) was in default as at 31 March, but other banks had ratios above the five percent recommended.
“This percentage represents the money that customers have failed to repay to the bank within the agreed timeframe. When the percentage rises, it means greater pressure on banks and greater difficulty in granting new loans to the public and businesses”, reads the report.
“The rise in these overdue debts is often linked to factors such as households’ financial difficulties, a fall in corporate income, a rise in the cost of living and instability in certain sectors of the economy”, adds the report.
However, the document says, BCI has strengthened its internal reserves to cover potential losses, achieving a coverage ratio of 21.03 percent, in an attempt to mitigate the impact of these defaults.
According to the report, Millennium-BIM had better performance as it reduced its non-performing loan ratio to 2.37 percent, down from the previous figure of 2.69 percent. This bank also increased its coverage ratio to 86.57 percent, indicating a more secure position to deal with any potential defaults.
However, Moza Banco reduced its non-performing loan ratio from 29.21 percent to 27.58 percent, which still represents a high level of loans to be recovered, “but there are signs of improvement.”
For its part, Access Bank maintained the same percentage as in the previous period, at 6.96 percent, still above the limit recommended by the Central Bank.
“FNB recorded 4.66 percent, Standard Bank just 0.64 percent, First Capital Bank recorded 1.66 percent and Absa Bank 4.15 percent – all within safe limits”, reads the document.
Over the last year, the non-performing loan stood at 30 billion meticais (469.4 million US dollars at the current exchange rate), which corresponds to 9.32 percent.
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