Cabo Verde's financial system remained resilient in 2025, supported by robust economic growth and an improved financial position in the banking sector, according to the Financial Stability Report published by the Bank of Cabo Verde (BCV) on Friday, 25 July.
"The national financial system remained resilient in 2025, benefiting from the maintenance of robust economic growth and the strengthening of the financial position of the banking sector," the report's executive summary states.
The solvency ratio rose from 23.9% to 25.2%, remaining well above the regulatory minimum of 12%, while non-performing loans declined by 32.4%.
As a result of that reduction, the non-performing loan ratio fell from 7.9% to 5.2%, accompanied by increased coverage of non-performing exposures, the central bank said.
Despite the improvement in key indicators, the BCV cautioned that significant structural vulnerabilities persist within the national banking sector.
Concentration in credit and deposit markets remained elevated, as did reliance on institutional funding sources, while exposure to the real estate sector continued to be substantial.
The central bank also highlighted that the interconnection between the banking sector and the public sector remained significant, though it had diminished in relative terms.
According to the institution, linkages between institutions and sectors represent potential channels for the transmission and amplification of shocks, justifying continuous risk monitoring.
On the technology front, high dependence on digital infrastructure and interconnectivity between institutions increases the potential for disruption of financial activity and the propagation of cyber incidents.
BCV Warns of Climate Risk Impact
The BCV also warned of the country's exposure to physical climate risks, noting that the extreme weather events recorded in 2025 demonstrated the potential to affect economic activity, household and corporate incomes, and asset values.
These impacts could in turn affect the financial system through a deterioration in the repayment capacity of economic agents and an increase in risks for financial institutions.
Under its prudential policy framework, and based on 2025 data, the BCV classified two banks as institutions of high systemic importance, three as institutions of minor systemic importance, and two as institutions without systemic importance.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/?p=547594
