Banks’ lending to private sector up by 1.5%
COMMERCIAL banks’ lending to the private sector increased to K22,950.7 million in June 2017 from K22, 622.4 million recorded in March 2017, representing an upward adjustment of 1.5 percent.
And the banks’ Non-Performing Loans (NPLs) as at June 2017 stood at K2, 844.6m against K2, 309.0m recorded in the same month in 2016.
In giving a general performance of the banking sector, Bankers Association of Zambia (BAZ) public relations and administrative officer, Miriam Zimba, said the industry in the first half of 2017 was satisfactory in terms of earnings and capitalisation levels.
Ms. Zimba said the market liquidity had increased due to the easing of the monetary policy which had also led to decline in commercial bank nominal lending rates.
“Lending to the private sector increased by 1.5 percent from K22, 622.4m recorded in March 2017 to K22,950.7m in June 2017. The average nominal lending rates declined to 26.6 percent in June 2017 from 28.8 percent in March 2017,” she said.
She however said the asset quality of the banking sector had continued on a downward trend due to deteriorating asset quality ratios from the increase in the NPLs.
Ms. Zimba explained that banks had continued to enhance credit risk management processes to mitigate further deterioration.
“The increase in the non-performing loans have been primarily due to slowdown in economic activities specifically related to the power shortages and the volatility and low copper prices on the international market experienced in 2016,
“The contraction in lending activity was mainly attributed to the flat economic activity and constrained liquidity which came as a result of tight monetary policies to control inflation and the exchange rate,” she said. Ms. Zimba attributed the increase in NPLs in 2017 to the relatively weak economic growth.
She, however, said BAZ expected the loan default rates to reduce with improved economic growth prospects as a result of increased agriculture and mining outputs as well as improved electricity generation and the continued dismantling of arears owed to suppliers by Government.