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Harare Bureau
THE non-performing loans ratio has continued on a downward trend retreating to below 13 percent and heading towards the single digit target set by the Reserve Bank of Zimbabwe. The RBZ has set a five percent benchmark for the NPL ratio by next year. RBZ Governor John Mangudya told our Harare Bureau that the measures the central bank and the financial services sector have implemented were producing results.
“NPLs are continuously going down,” said Mangudya. He said the measures being implemented by the central bank and the financial services sector will help to guard against laxity and the growth of the NPLs ratio. “For now they’re around 13 percent. By next year we expect them to be around the benchmark of five percent. So yes they’re continuously going down because banks have measures in place to safeguard against the increasing NPLs,” he said.
In his Monetary Policy statement in July, Mangudya said the banking sector’s aggregate ratio of NPLs to total loans improved from a peak of 20.45 percent in June 2014 to 14.52 percent as at June,30, 2015. The exclusion of Tetrad, which is under provisional judicial management, further improves the ratio to 13.15 percent.
Banks have since surrendered more than $188 million worth of NPLs for takeover by the Zimbabwe Asset Management Company. Financial institutions are saddled with about $577 million worth of NPLs and the RBZ has been working with the sector to clean the institutions’ balance sheets.
“Against a background of high levels of NPLs, and their economy-wide implications, the Reserve Bank has instituted holistic measures to resolve non-performing loans in the banking sector. “In addition, banking institutions have instituted various measures to resolve the NPLs including the formation of dedicated loan recovery units, refining of credit underwriting standards as well as restructuring of some facilities,” said Mangudya.
Bongani Ndlovu
Online Reporter