The Mozambican financial system grew by 4.6 per cent in 2023, according to the Bank of Mozambique’s (BdM) Financial Stability Report (REF).
The document quoted by Semanário Económico pointed out that despite internal and external challenges, the main financial indicators show that the system remains stable, solid and well capitalised.
As far as the banking sector is concerned, the REF pointed out that the indicators remained stable, profitable and adequate over the past year. The solvency ratio reached 25.67 per cent in 2023, well above the regulatory minimum of 12 per cent, which includes the conservation reserves for Domestic Systemically Important Banks (D-SIBS). In addition, the banking sector’s liquidity was satisfactory, reaching 47.42 per cent, above the required minimum of 25 per cent.
However, the REF warns that asset quality still presents challenges, with the non-performing loan (NPL) ratio standing at 8.24 per cent in 2023, above the internationally recommended limit of 5.0 per cent. The NPL coverage ratio by specific provisions was 66.04 per cent.
In terms of growth, the banking sector’s assets increased by 7.27 per cent, driven by the increase in deposits and resources from other credit institutions, although credit to the economy fell by 2.45 per cent over the same period.
The banking sector’s net income will grow by 8.12 per cent in 2023, following an increase of 16.13 per cent in 2022, with D-SIBS contributing a significant 73.92 per cent of the total.
The REF also emphasises that the level of concentration in the banking sector is declining, which indicates greater competitiveness in the market. However, the insurance sector and investors in the Securities Market (MVM) have increased their investments in public debt securities, thus increasing their exposure to sovereign risk.
With regard to systemic risk, the index stood at 32.29 per cent, remaining at a moderate level despite a reduction of 7.29 percentage points due to the easing of macroeconomic and market risks.
Although the systemic risk is moderate, the REF identified persistent vulnerabilities both internally and externally, such as military instability in northern Mozambique, the country remaining on the Financial Action Task Force (FATF) grey list and extreme weather events.
To mitigate these risks, the BoM decided to keep all macroprudential policy instruments unchanged, including the conservation reserves for D-SIBS and quasi-D-SIBS at the minimum levels of 2.0 per cent and 1.0 per cent respectively.
