Ratios Decline in Mozambique’s Banking System

Lisbon, March 20, 2015

The latest figures from the Bank of Mozambique have revealed a decline in the financial health of the country’s banking system.

Non-Performing Loans (NPL) Ratio

The NPL ratio has increased to 5.3% in 2014, up from 2.3% in 2013 and 15.1% in 2012. This significant rise is a cause for concern among regulators and financial experts.

Leverage Ratio

On the other hand, the leverage ratio remained stable at 9.4% in 2014.

Profitability Ratios

Profitability ratios ROA (Return on Assets) and ROE (Return on Equity) increased to 2.10% and 22.20%, respectively.

Regulatory Framework

The Bank of Mozambique has implemented a supervisory framework based on Basel II guidelines, which provides a robust regulatory structure for the banking system. The Central Bank is responsible for regulating and supervising banks, while the Insurance Supervisory Authority oversees insurance companies and pension funds.

Challenges Facing Supervision

However, the bank’s supervisory mechanism faces several challenges, including:

• Compliance with international best practices
• Implementation of the Basel II framework
• Cross-border supervision

Human Resource Shortage

The shortage of skilled human resources is also a major obstacle, as many supervisors lack appropriate training and academic qualifications. This has led to concerns about the effectiveness of banking supervision in Mozambique.

Islamic Banks

In addition, the absence of a specific regulatory framework for Islamic banks in Mozambique means that there are currently no Islamic banks operating in the country.

Commitment to Financial Inclusion and Stability

Despite these challenges, the Bank of Mozambique is committed to promoting financial inclusion and the value of the metical, the country’s currency. The bank has implemented various initiatives aimed at increasing access to financial services and improving the overall stability of the banking system.