COVID-19 IM­PACT ON BANKS IN AFRICA NOT DEV­AS­TAT­ING

Pretoria News - - THE X-FILES - | Banele Ginindza

MOODY’S In­vestor Ser­vices has said its read­ing of the im­pact of the Covid-19 coro­n­avirus would not have an ul­ti­mately dev­as­tat­ing ef­fect on Africa’s bank­ing sys­tems, in­clud­ing those of Nige­ria and South Africa. In a re­port last night on the Bank­ing Sec­tor, the rat­ings agency, on which South Africa breath­lessly awaits a cru­cial rat­ings de­ci­sion, ac­knowl­edged that the coro­n­avirus pan­demic and the sharp oil price drop have al­ready led to port­fo­lio out­flows from emerg­ing mar­kets, in­clud­ing Africa, and will ex­ac­er­bate the slow­down in eco­nomic growth at a time when gov­ern­ment debt lev­els have in­creased to over 50 per­cent of GDP on aver­age across the con­ti­nent. Moody’s said in such an en­vi­ron­ment, banks’ financial per­for­mance – as­set qual­ity, prof­itabil­ity, and for­eign cur­rency liq­uid­ity – will likely suf­fer. It said banks specif­i­cally in oil-ex­port­ing coun­tries, due to their heavy ex­po­sure to the oil & gas sec­tor, pri­mar­ily Nige­ria, will face re­newed as­set qual­ity pres­sures. Partly dol­larised bank­ing sys­tems like An­gola, DRC and Nige­ria will also be faced with re­newed for­eign cur­rency liq­uid­ity pres­sures if the port­fo­lio out­flows persist. “De­spite these chal­lenges, our base­line sce­nario assumes a sig­nif­i­cant global dis­rup­tion but not an ex­ten­sive and pro­longed slump,” Moody’s said.

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