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(Agence Ecofin) – African banks will evolve in 2019 in a context that will be marked by stable returns, we learn from a prospective analysis note, published by the US rating agency Moodys, which relied on the institutions it notes.
" Accelerated economic growth in Africa, although still below potential, will support credit growth, while tighter regulation and better supervision will support financial stability Said Constantinos Kypreos, a vice president at Moody's.
More specifically, it is expected that the acceleration of the pace of growth of the African gross domestic product to 3.8% against 2.7% in 2017, stimulates the demand for bank loans. Thus, despite the increase in operating expenses and general expenses, we will expect an improvement in net interest income and net banking income.
But, warns Mr Kypreos, there is a risk behind this opportunity. A significant portion of bank investments will be made on bonds issued by the States. However, they are already facing deadlines on their foreign currency debts while at the same time relying on export revenues.
However, according to the expert Moody's, they could face headwinds in relation to rising interest rates on international markets, political uncertainties and growing trade tensions between superpowers. The situation is not the same for all banks.
Those whose systemic importance is proven can benefit from support from their governments in the event of major challenges. Also, most countries have put in place deposit insurance mechanisms, in case of challenges. And finally, subsidiaries of multinationals could get support from their parent companies, as they weigh little in the assets of these major international banking groups.
Idriss Linen
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