The banking sub-sector’s total assets increased by 17.3 percent to 46.15trn/- in 2022 from 39.34trn/- recorded during the preceding year which mainly attributed to the increase in deposits, borrowings and retained earning according to the Annual Financial Sector Supervision Report 2022 released by the Central Bank.
Available data from the Bank of Tanzania (BoT) show that deposits increased by 14.3 percent to 32.58trn/- in 2022 from 28.49trn/- recorded in the preceding year.
“The increase was due to public confidence in the banking sector, favourable economic activities and deposit mobilization strategies instituted by banks and financial institutions,” the report shows.
Loans, advances and overdrafts increased by 25.3 percent to 26.09trn/- which accounted for 56.5 percent of total assets.
“The observed growth was attributed to favourable macroeconomic environment, the Bank’s sustained accommodative monetary policy and regulatory measures taken to support private sector’s credit growth,” the report shows.
The sector’s outreach continued to expand through branch network, agent banking, digital and other delivery channels.
The number of banks’ branches decreased to 987 from 990 reported in 2021, while the number of agents and number of deposit transactions increased by 53.8 percent to 75,238 and 59.0 percent to 81,007,984, respectively.
Deposits through agents increased by 71.1 percent to TZS 61,915.9 billion. The growth implies that this service delivery channel has become a more effective means of mobilizing deposits and increasing access to and usage of banking services.
According to the Central Bank Governor Emmanuel Tutuba, the banking sub-sector in 2022 remained sound and stable in terms of capital adequacy, liquidity, asset quality and profitability.
“Core and total capital adequacy ratios were 17.9 percent and 18.7 percent compared to 19.5 percent and 20.2 percent recorded in the preceding year, respectively. The decrease in capital adequacy ratios was attributed to increase of risk-weighted assets,” Tutuba said.
He added, “The ratios were above the minimum regulatory requirements of 10 percent and 12 percent for core and total capital, respectively,”
Asset quality improved as reflected by a decline in level of non-performing loans (NPLs) ratio to 5.8 percent from 8.5 percent recorded in 2021.
“The improvement in asset quality was due to improved credit risk management practices by banks and financial institutions as well as measures instituted by the Bank.
The ratio of liquid assets to demand liabilities was 26.1 percent compared to 29.4 percent recorded in 2021, above the minimum regulatory requirement of 20 percent, the decline in liquidity ratio was attributed to portfolio shift to more profitable investments.
Profitability improved as depicted by increase in return on assets (ROA) and return on equity (ROE) to 3.5 percent and 14.2 percent from 2.8 percent and 11.5 percent recorded in preceding year, respectively.
“The increase in profitability was driven by increase in interest income consistent with growth in loan portfolio, increase in non-interest income and improvement in operational efficiency,” He added.
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