In December 2020, national commercial banking assets amounted to 786.2 billion Meticais, representing a growth of 17.3% over the same period of the previous year and an increase, relative to Gross Domestic Product (GDP), from 69.4% in December 2019 to 80.0% in December 2020.

According to the Financial Stability Report, cited by Carta de Moçambique, published recently by the Bank of Mozambique, the increase in assets was financed by an increase in deposits of 23.1%.

"With regard to liabilities, deposits, which are the main source of funding for credit institutions, amounted to 567,871 million Meticais, in December 2020, which corresponds to a growth of 23.1%, when compared with the same period of the previous year," says the document.

The source explains that of the total deposits, 406.2 billion Meticais were represented in national currency (71.5%) and 161.6 billion Meticais (28.5%) in foreign currency. The report further details that in the reporting period, the banking sector's equity totaled 134 billion Meticais, representing an increase of 8.5% compared to December 2019. "This change was essentially due to the expansion of reserves by 22.1 billion Meticais (62.3%)," the document explains.

The Central Bank's balance sheet also shows that in December 2020, the ratio of non-performing loans (NPL) to total credit in commercial banking, the main indicator of asset quality, remained around 10.0%, a figure above the international benchmark of 5%, contributing to the maintenance of credit risk at a moderate level.

"The solvency ratio stood at 26.1% (29.0% in December 2019), a figure that represents 14.1 pp above the regulatory minimum (12%). This drop (2.9 pp), which occurred in 2020, results from the increase in risk-weighted assets (21.5%), higher than the increase in eligible own funds (9.3%)," reads the Bank of Mozambique report.

In another development, the report details that the main profitability indicators of the banking sector remained at satisfactory levels, even though they registered a reduction in relation to the previous year, which contributed to the maintenance of the low risk level of the profitability and solvency category.

The annual report of the Bank of Mozambique points out that the return on assets of commercial banking retracted in the year under review compared to the previous year, standing at 2.2% (3.0% in December 2019) and the return on equity recorded the value of 18.7% (24.9% in December 2019).