African Banks Face Surge in Non-Performing Loans Amid COVID-19 Recovery

Asset quality will deteriorate very rapidly in 2021 and beyond, due to the impact of Covid-19 on households and businesses, added to the expiration of temporary debt relief measures, the American rating agency said in a recently published press release, stressing that the most plausible scenario is the active recovery of loans to large companies, thus avoiding the increase in non-performing loans, reports L’Opinion.

"The rebuilding of profits will be slower for South African banks," the international rating agency predicted. To this forecast is added the financing and liquidity which will generally remain stable and the growth of deposits which will remain strong.

In addition, foreign exchange liquidity risks have not materialized, especially in Nigeria, however, they constitute a major threat to bank ratings. In addition, 50% of the bank ratings covered by Fitch have negative outlooks, "compared to 35% a year ago". These perspectives "reflect either the fact that the sovereign is on negative perspectives, or an autonomous weakness, generally around capital," the agency stressed.

For the record, the outstanding non-performing loans held by banking institutions in Morocco, during the month of October, increased by 670 million dirhams, compared to the month of September. Thus, the portfolio of non-performing loans held by banks at the end of October 2020 reached 79.69 billion dirhams, up more than 10 billion dirhams in one year. Added to the total outstanding bank loans of 936 billion dirhams, the non-performing loan ratio of the banking sector reached 8.53% at the end of October 2020, compared to 7.6% at the beginning of the year. The increase in these assets concerns loans to businesses and those to households.