The banking sector has continued growing in terms of deposits and assets, thanks to favourable macroeconomic environment.
The Bank of Tanzania (BoT) said in its latest Financial Stability Report (FSR) that the sector growth was also the results of remained resilient to internal and external shocks.
The report showed that total assets grew by 12.4 per cent during six month to September last, while deposits grew by 6.7 per cent.
“The sector was adequately capitalized,” FRS of September said adding “with ratio of core capital to total risk weighted assets well above the regulatory requirement.”
The core capital to total risk ratio was 16.7 per cent between March and September 2015 well above the regulatory requirement of 12.5 per cent.
BoT said the credit portfolio was fairly diversified as measured by ratio of aggregate large exposures to core capital of 126.8 per cent in September 2015 from 137.0 per cent recorded in March 2015.
The Bank of Tanzania (BoT) said in its latest Financial Stability Report (FSR) that the sector growth was also the results of remained resilient to internal and external shocks.
The report showed that total assets grew by 12.4 per cent during six month to September last, while deposits grew by 6.7 per cent.
“The sector was adequately capitalized,” FRS of September said adding “with ratio of core capital to total risk weighted assets well above the regulatory requirement.”
The core capital to total risk ratio was 16.7 per cent between March and September 2015 well above the regulatory requirement of 12.5 per cent.
BoT said the credit portfolio was fairly diversified as measured by ratio of aggregate large exposures to core capital of 126.8 per cent in September 2015 from 137.0 per cent recorded in March 2015.
“The levels were within the regulatory limit of 800 per cent,” the report showed.
It added: “Stress testing results revealed that, in aggregate terms, the sector was resilient to interest, credit and exchange rate shocks”.
Financial markets experienced tight liquidity conditions owing to strengthening of the US dollar and policy actions to mitigate exchange rate volatility.
The shilling depreciated by 20.6 per cent in six months to last September to 2,135/40 a US dollar.
“As foreign exchange volatility increased,” FSR said, “money markets experienced tight liquidity which was accompanied by rising cost of funds.”
The overnight interbank quarterly weighted average rate in September 2015 doubled to 14.3 per cent from March 2015.
On the other hand, capital markets experienced slowdown as reflected by a decline in total market capitalization by 1.8 per cent to 22.166tri/- on account of depreciation of share prices of some domestic and cross listed companies.
The report concluded that the country’s financial system is expected to remain resilient in the next six months in light of positive macroeconomic outlook and improvement in regulatory oversight.
However, according to BoT, the system is vulnerable to increased downside risks arising from unfolding global macroeconomic and financial environment.
It added: “Stress testing results revealed that, in aggregate terms, the sector was resilient to interest, credit and exchange rate shocks”.
Financial markets experienced tight liquidity conditions owing to strengthening of the US dollar and policy actions to mitigate exchange rate volatility.
The shilling depreciated by 20.6 per cent in six months to last September to 2,135/40 a US dollar.
“As foreign exchange volatility increased,” FSR said, “money markets experienced tight liquidity which was accompanied by rising cost of funds.”
The overnight interbank quarterly weighted average rate in September 2015 doubled to 14.3 per cent from March 2015.
On the other hand, capital markets experienced slowdown as reflected by a decline in total market capitalization by 1.8 per cent to 22.166tri/- on account of depreciation of share prices of some domestic and cross listed companies.
The report concluded that the country’s financial system is expected to remain resilient in the next six months in light of positive macroeconomic outlook and improvement in regulatory oversight.
However, according to BoT, the system is vulnerable to increased downside risks arising from unfolding global macroeconomic and financial environment.
Source: Daily News, reported from Dar es Salaam, Tanzania
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