Breaking News

34 border jumpers arrested

POLICE have intercepted 34 suspected border jumpers and arrested two haulage truck drivers on allegations of ...

Get breaking news alerts.
Don't miss a thing.
Subscribe

Banks have capacity to lend corporates

16 Jul, 2020 - 00:07 0 Views
Banks have capacity to  lend corporates

The Herald

Business Reporter
Local banks have significant financial capacity to lend to corporates that require working capital to support recovery from the Covid-19 pandemic, recent economic research findings have revealed.

The latest available banking sector statistics show the sector has potential to play a key role in supporting the recovery of the corporate sector from the impact of Covid-19, the Zimbabwe Economic and Policy Research Unit (Zeparu) said.

“At 38,82 percent against a benchmark of 70 percent, the loan-to-deposit ratio suggests that banks have room to increase credit for those companies that may need working capital,” Zeparu said in its Economic Barometer Volume 21.

The capital adequacy ratio is more than three times the regulatory requirement of 12 percent. The liquidity ratio (75,59 percent) is also high, more than double the regulatory requirement of 30 percent.

Further, Zeparu said non-performing loans are also under check at 3,23 percent against a benchmark of 5 percent, although they might increase due to the economic slowdown from Covid-19.

As at end of December, total banking sector assets were $53,7 billion, total loans and advances stood at $10,2 billion, while total deposits were pegged at $34 billion.

The Covid-19 pandemic is projected to severely impact on the global economic growth from 2,9 percent in 2019 to minus 3 percent in 2020.

Countries have had to incur huge costs to protect human lives and allow health care systems to cope.

Further, measures to contain the spread of the pandemic have required isolation, national lockdowns, and widespread closures, thereby slowing economic growth across the globe.

Global growth forecast is still characterised by uncertainties although the initial forecast for 2021 is a growth of 5,8 percent.

In 2021, growth of big economies in the region like Nigeria and South Africa is expected to recover from -3,4 percent to 2,4 percent and from minus 5,8  percent to 4 percent respectively.

Share This:

Sponsored Links