Tunisia’s Banking Sector: Challenges and Opportunities

Overview

The Tunisian banking sector is facing a mix of challenges and opportunities. The country’s economic situation has impacted banks’ profits and loan repayment rates, while the emergence of new technologies and segments presents potential for growth.

Challenges in the Banking Sector

• Economic difficulties: Tunisia’s economic situation is affecting banks’ profits and loan repayment rates.
• Portfolio risk: Weaknesses in the broader economy are increasing the risk faced by banks, impacting their lending activities.
• Consolidation: The central bank may push for sector consolidation to strengthen players and boost stability, but a clear move towards this has not yet begun.

Opportunities in the Banking Sector

• Islamic finance: This segment is growing rapidly, with sharia-compliant banks expanding their operations and traditional banks considering introducing Islamic products.
• Microcredit: Microfinance activities are developing rapidly, with the total loan portfolio exceeding TND 1bn in April 2019.
• Fintech: Fintech players are helping to bridge gaps and penetrate the unbanked population through innovative solutions such as secure, cashless payment methods.
• Leasing segment: The leasing segment has undergone consecutive years of development and is an important part of the financial sector.

Regulatory Updates

• Prudential rules: Banks will need to adapt to new prudential rules set by the central bank, including aligning with Basel III requirements.
• Fintech regulations: The central bank may update regulations to keep pace with developments in fintech and protect both institutions and consumers from fraud and cybercrime.

Overall, while the banking sector faces challenges due to economic difficulties and portfolio risk, there are opportunities emerging in areas such as Islamic finance, microcredit, and fintech.