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In spite of depression woes, S’Africa’s banking system gets stable outlook

Published

6 years ago

September 12, 2018

It may not all be sad for news for South Africa’s economy which has just fallen into depression.

Moody’s has changed its outlook for the country’s banking system from negative to stable, the ratings agency said in a report issued on Tuesday.

In its report, Moody’s said the banks’ creditworthiness would remain resilient over the next 12 to 18 months, although they will face weakening operating conditions.

“Slow economic growth will hold back the banks’ new business and revenues,” the report read.

Economic growth is expected to remain weak given poor consumer spending, volatility in emerging market currencies as well as inflationary pressures. Moody’s recently cut the growth forecast for 2018 from 1.5% to between 0.7%.

Moody’s said SA bank credit risk profiles and problem loans would remain stable until the end of 2019. Capital is also expected to remain strong for the period. Further, funding and liquidity conditions will be stable.

However a challenging operating environment will suppress business opportunities and loan demand, exerting pressure on banks’ loan quality. Loan growth slowed to 2.1% in May 2018, compared to 2.5% in May 2017, according to Moody’s.

“We expect growth to remain subdued in 2018/19 because of weak demand, particularly as growth in mortgage loans has slowed. We also believe that banks have further tightened their lending criteria in response to the weak economy, which will further dampen loan growth by making it harder for borrowers to take on new credit,” Moody’s explained.

The lower loan growth is likely to impact net interest income. Increased costs for staff and digitalisation will also drag down net profitability, the report said.

Overall, earnings will be strained by slower revenue growth and higher operating expenses.

Although profitability has remained resilient, the low economic growth, rising competition from larger banks and fintechs could curb pricing power, and drive down revenue growth.

Moody’s expects return on assets and return on equity to come under pressure in 2018/19.

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Moroccan annual inflation rises to 0.8% in November

Published

24 hours ago

December 21, 2024

Ifeoluwa Dada

Morocco’s statistics office has confirmed that the country’s annual inflation rate, as determined by the consumer price index, increased from 0.7% in October to 0.8% in November.

Monthly, consumer prices decreased by 0.2% from October.

The primary driver of inflation, food costs, grew by 0.8% compared to the previous year, while non-food inflation climbed by 0.7%. Core inflation, which does not include more erratic items like food, increased 2.6% annually and 0.2% monthly.

According to the central bank, inflation is expected to average 1% this year, down from 6.1% last year.

Despite the Al-Haouz earthquake, a spike in inflation, and worldwide economic challenges, Morocco’s GDP grew by 3.4% in 2023.

A recovery in tourism, robust industrial exports, and rising private consumption—all bolstered by prudent macroeconomic policies—were the main drivers of growth.

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Nigeria’s $42bn foreign reserves enough for 9 months’ imports— Central Bank

Published

2 days ago

December 20, 2024

Ifeoluwa Dada

According to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), the nation’s $42.01 billion in foreign reserves can cover imports of goods and services for almost nine months.

Cardoso promised Nigerians improved economic fortunes in 2025 while addressing the Senate Committee on Banking, Insurance, and Other Financial Institutions yesterday in Abuja at the presentation of the performance index report.

Cardoso stated: “External Reserves rose from $ 38.35 billion it was on September 30, 2024, to $ 42.01 billion as of December 12, 2024”.

He clarified that third-party receipts in Q3 2024 and revenues from taxes connected to crude oil were the main drivers of the rise in foreign reserves during the specified time.

“We saw remarkable improvements in our trade balance and maintained a current account surplus,” he added.

“Our external reserves level can finance over 9.09 months of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks”.

On cash shortage, the CBN boss reiterated the N150 million fine against any branch of banks caught illegally distributing new Naira notes to currency hawkers and unscrupulous elements and said the Nigerian economy will improve in 2025 through policies and measures.

He predicted a stronger economic future: “Despite our economy’s challenges, there are clear reasons for optimism.

“The gradual stabilization of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”