News / National
Zimbabwe banks tighten purse strings
10 May 2019 at 07:18hrs | Views
Most financial institutions are tightening on lending as they try to significantly reduce Non-Performing Loans (NPLs) ratios.
This comes as most banks increased total loans and advances last year to US$4,22 billion compared to US$3,80 billion in 2017.
But the jump in loans and advances saw a concomitant rise in NPLs to 8,30 percent for the entire banking sector, up from 7,08 percent as at December 2017.
The globally accepted NPLs benchmark is 5 percent and anything above that becomes worrisome and toxic. However, since local banks hit an NPLs level of 20,5 percent in 2015, market watchers still believe the current level is not too bad, if it is managed well.
A low NPLs level trend is viewed as a sign of stability in the financial services sector.
This comes as most banks increased total loans and advances last year to US$4,22 billion compared to US$3,80 billion in 2017.
But the jump in loans and advances saw a concomitant rise in NPLs to 8,30 percent for the entire banking sector, up from 7,08 percent as at December 2017.
The globally accepted NPLs benchmark is 5 percent and anything above that becomes worrisome and toxic. However, since local banks hit an NPLs level of 20,5 percent in 2015, market watchers still believe the current level is not too bad, if it is managed well.
A low NPLs level trend is viewed as a sign of stability in the financial services sector.
Source - Business Weekly
