Most Mozambican banks have non-performing loan ratios above the 5% recommended by the Bank of Mozambique (BdM). According to the recent report on economic and financial indicators, two banks stood out with the highest non-performing loan ratios: Banco Nacional de Investimento (BNI) and Moza Banco.
BNI ended the third quarter with a non-performing loan ratio of 43.79%, down from 60.45% in the previous quarter. Moza Banco, the country’s fifth largest bank, had a non-performing loan ratio of 26.92%. These figures reveal an alarming trend, especially considering that the BdM’s recommendation is to keep this ratio below 5%.
Of the 15 or so commercial banks listed by the BdM, only three managed to stay below the recommended limit. First Capital Bank (FCB), United Bank for Africa (UBA) and Standard Bank had non-performing loan ratios of 0.59%, 0.83% and 2.59% respectively. These institutions stand out amid a panorama in which most banks face significant challenges in containing defaults.
The governor of BdM, Rogério Zandamela, stated earlier this month that the national banking sector is “solid and well capitalized”. However, he also warned of the persistent challenge posed by high levels of non-performing loans. This discrepancy between the solidity of the sector and the persistence of default rates raises questions about the strategies adopted by banks to mitigate risks and maintain financial stability.
The high rate of non-performing loans suggests an urgent need for banks to review their lending practices and implement more robust risk management measures. Transparency and efficiency in banking operations will be crucial to restoring investor confidence and ensuring the stability of the Mozambican financial system in the face of these persistent challenges. The BdM, for its part, may be called upon to evaluate and adjust regulatory policies to ensure the long-term health of the sector.
