THE total banking deposits closed 2013 at $4,7 billion while loans and advances were at $3,7 billion, the central bank said yesterday.
As at May 2013, total deposits stood at $3,7 billion down from $4,2 billion during the first quarter of 2013 due to liquidity constraints.
Presenting the monetary policy statement yesterday, acting Reserve Bank of Zimbabwe governor Charity Dhliwayo said the loans to deposit ratio increased from 37,33% in June 2009 to 78,29% as at 31 December 2013.
“Notwithstanding the deceleration in deposit growth, the loans to deposit ratio increased from 37,33% in June 2009 to 78,29% as at 31 December 2013,” Dhliwayo said.
Dhliwayo said the bulk of the deposits were short term in nature which has constrained the banking sector’s potential to provide effective financial intermediation to productive sectors of the economy.
“The tenor of lending has remained confined to the short-term at a time when the productive sectors require long-term funding for re-tooling.”
Individuals constituted the bulk of lending distribution at 23,80%, a reflection of the attendant macroeconomic challenges currently experienced.
“In addition, this development exposes the structural fragilities in the sector, particularly in view of the consumptive nature of the lending and widespread de-
industrialisation in the economy. Lending to the construction sector remained low, accounting for about 4% of total banking sector lending as at December, 31, 2013,” Dhliwayo said.
She said undercapitalised banks were saddled with high levels of high non-performing loans resulting in the understatement of the level of provision of bad and doubtful debts, thereby overstating the respective institutions’ earnings and capital positions.
“As such, banking institutions are required to set aside adequate provisions that reflect the level of credit risk in their loan portfolio. Within this context, the banking sector’s average non-performing loans to total loans ratio stood at 15,92% as at 31 December 2013,” she said.
Dhliwayo said the central bank has noted abuse of loans and
advances by related parties particularly directors and shareholders that has resulted in huge levels of non-performing insider loans. However, the acting governor did not give the status of undercapitalised banks in the monetary policy.