Ezulwini – The banking sector in Eswatini had a modest 4.9% asset-growth of E30.3 billion by June 2025, driven largely by a 9% expansion in loans, advances as well as a 13.6% surge in government securities.
The Central Bank of Eswatini (CBE) Governor, Dr. Phil Mnisi, stated that the sector remains fundamentally stable due to strong capital and liquidity buffers. But he warned that rising non-performing loans, funding pressures, and concentration risks that must be closely monitored.
“The decline in earnings may limit banks’ capacity to absorb shocks and generate internal capital, making operational efficiency and innovation essential,” he said.
The CBE’s review of the sector shows a net profit fall of E495.7 million from E574.9 million of the previous year, reflecting a broad weakening in profitability.
Key performance indicators, with the Return on Assets (ROA) show a drop from 2.0% to 1.6% and the Return on Equity (ROE) sliding from 13.8% to 11.5%. The cost-to-income ratio also rose sharply to 81.8%, signalling increased operational pressures and reduced efficiency across the banking sector. Capital buffers also showed a slight weakening. The total capital adequacy ratio dipped from 17.4% to 16.9%, a change largely attributed to slower profit retention and an increase in risk-weighted assets.
The asset quality of banks continues to face headwinds, with non-performing loans (NPLs) rising from 6.7% to 7.0%. Corporate loans remain more stressed at 7.9%, compared to 6.7% for household loans.
Concentration risks remain high, with the top 20 borrowers accounting for 33.7% of total loans — a level that the CBE says requires close monitoring given the potential systemic impact of default.
On a positive note, liquidity conditions improved slightly. The liquid assets-to-deposits ratio rose to 32% and the liquid assets-to-total assets ratio increased to 23%. However, the loan-to-deposit ratio climbed to 85.8%, suggesting deeper financial intermediation but also higher vulnerability to funding shocks.
Mnisi said that while the system remains stable, banks must continue to strengthen their risk management frameworks, enhance operational efficiency, and embrace innovation to safeguard financial stability in an increasingly uncertain environment.
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