Tanzania Banking & Financial Services Q2 2018
The central bank continues to push forward with plans to address failing banks by revoking the licences of under-capitalized banks, while at the same time interest rates are falling and minimum capital ratios have been cut in order to stimulateasset growth. This should boost lending, albeit more cautiously than in the past, by well-capitalized banks with relatively low non-performing loan (NPL) ratios while failing banks are being closed. Banks with NPL ratios of over 50% are likely to close and mergeassets, but in the meantime larger banks with NPL ratios of over 10% will be focused on improving their asset base and meeting thecentral bank's higher capital adequacy ratios and capital buffers. The banking and finance sector is set to see net asset value (NAV)rise from USD1.67bn in 2017 to USD4.18bn by 2027, an increase of 150% over the 10 year period. Outside the banking industry,the insurance sector is set for strong growth but from a very low base and will not be a significant generator of investment. Assetmanagement remains focused on equities, which have only just revived from a bear market in H216, while the real estate sectorremains under-exploited.
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