The country's banking sector remains safe and resilient despite the shocks caused by the Covid-19 pandemic, Finance and Economic Development Minister Professor Mthuli Ncube has said.
In the Mid-Term Budget Review Statement presented last week, Prof Ncube said in the context of the disruptive impact of the Covid-19 pandemic, Government has promulgated regulatory relief measures and muted the potential negative effects to the financial sector's performance.
"The banking sector is safe and sound, against the background of the disruptive impact of the Covid-19 pandemic. Government support and regulatory relief measures implemented thus far, have cushioned the economy and muted the potential adverse impact to the banking sector's performance. The measures have ensured continued orderly functioning of the financial market, continuous flow of credit and fostered financial sector stability," he said.
The banking sector remained adequately capitalised, with aggregate core capital of $64,21 billion as at 31 March 2021, an increase of 20,74 percent, from $53,18 billion as at December 31 last year.
The sector's average capital adequacy and tier one ratios of 30,04 percent and 19,43 percent, respectively, were above the regulatory minimum of 12 percent and eight percent, respectively. Minister Ncube noted that banking institutions were making significant progress towards meeting the new minimum capital requirements that become effective from December 31,2021.
"As at 31 March 2021, seven banking institutions had already met the new minimum capital requirements of their chosen capital segment, with four at least 50 percent whilst five reported core capital levels below 50 percent," he said.
In terms of loans and advances by financial institutions, these increased by 27,69 percent from $82,41 billion as at December 31, 2020 to $105,23 billion at the end of March this year.
During the period under review, financial intermediation remained stable as reflected by loans to deposits ratio of 43,53 percent, said Minister Ncube.
He said the above position represents a conservative lending approach adopted by most banking institutions.
The banking industry's support to the productive sectors of the economy stood at 84,75 percent total loans in March.
The Medium -Term Accommodation (MBA) facility support towards productive sectors, including Small to Medium Enterprises (SMEs), amounted to $4,13 billion since the inception of the facility with an additional $2,5 billion having been approved for financing the 2021 winter wheat programme.