By EPN Reporter
MBABANE – It looks like 2022 was a good year for Eswatini’s banking sector, as it was able to rake in E2.810 billion.
This is contained in the 2023 Company Survey Report, which was released by the Ministry of Economic Planning and Development on Tuesday.
This report was prepared by the economic planning ministry, in collaboration with the Central Bank of Eswatini (CBE).
The survey focused on four banks, which were not named.
“Four of the total surveyed banking institutions reported on revenue performance. Data indicates that all the institutions realized revenue growth of 19.5 percent year-on year, to E2.810 billion in 2022,” states part of the report.
The increase in total revenue was mainly attributed to higher transaction volumes and growth in the loan book value, for most of the institutions. This was mainly in housing, vehicle finance, as well as corporate loans. The cumulative 225 basis point increase in interest rates in 2022 bolstered revenue growth for the majority of the institutions’ credit lines, resulting in a 27.0 percent year-on-year increase in the net interest income to E1.436 billion in 2022.
According to the report, data on profitability was received from four banking institutions. The consolidated profit for the sub-sector grew from E758.2 million in 2021 to E990.9 million in 2022, depicting a year-on-year increase of 30.7 percent.
The sub-sector had mixed developments in profitability, with only three of the banks reporting profits, whilst one (1) bank realised a loss during 2022. Performance for the sub sector was counteracted by the high operating cost environment, weak economic conditions, as well as high non-performing loans (NPLs).
The sub-sector’s outlook is broadly positive for all the financial institutions in the short to-medium term, leveraging on the prevailing high interest rates environment. On the other hand, the institutions expect to increase credit extended to companies within the agricultural and manufacturing sectors as well as SMEs, and the government.
The combination of high interest rates and increasing credit extension will support growth in interest income. Furthermore, efficiencies aimed at cutting operating costs, through the rolling out of Automated Teller Deposits (ADTs), as well as investments in Fintech solutions will add to the positive prospects for the banking sector.
All the surveyed banks reported on the performance of their loan books. Data reported by the five (5) institutions depicted that performance of the loan book value increased by 5.2 percent in 2022 relative to 2021. Growth in the loan book value was partly supported by the economy’s notable recovery from the COVID-19 setbacks, which saw an upsurge in capital business loans. Major improvements made within the digital banking space gave consumers better access to services, which supported growth in credit extension, particularly towards unsecured loans.
