The country’s banking sector assets grew below five per cent last year despite coronavirus pandemic shock thanks to loan book.

The assets grew by 4.1 per cent last year compared to 9.6 per cent in 2019 a report by EY Tanzania issued last week showed.

The report, Tanzania Banking Sector Review 2020, prepared using financial results data of 39 banks and non-bank financial institutions said the industry is “still considered stable and resilient”

The EY Tanzania report said the sector was still considered stable and resilient since banks have more than adequate capital buffers and liquidity.

“[And has the] ability to quickly capitalise on alternative channels such as agency, mobile and internet banking.”

These alternative channels, according to the report, has strengthened the accessibility of banking and related services and further helped to cater for the needs of customers.

The assets growth was pushed up by mainly loans, advances and overdrafts (54.1%), investment in government and debt securities (17.1%) and other assets (12.8%).

Also cash, balance with banks and items for clearing contributed (10.8%) and balance with other banks (5.2 %) of total assets.

The report said loans, advances and overdrafts recorded an increase of 3.9 per cent last year, which was in alignment with the growth in total assets compared to a 12.5 per cent increase recorded in 2019.

On liabilities and shareholders’ funds, customers’ deposits grew 3.4 per cent last year compared to an increase of 8.9 per cent in 2019 while shareholders’ funds grew by 8.7 per cent in comparison to a 10.7 per cent increase in 2019.

The total assets for ten large banks grew to 77 per cent from 72 per cent in 2019 on the other hand assets of medium-sized banks dropped to 20 per cent from 23 in 2019).

The share of total assets by regional and small banks remained fairly unchanged last year at around 3.0 per cent. The sector total assets were 33.5tri/-.

“The banking sector is highly concentrated, with many media, non-bank financial institutions, regional and small banks [which] struggled to grow,” the report said.

Though the country banking sector had 53 registered and licensed banks and non-bank financial institutions as at the end of last year, the report analyses only 39 banks and non-bank financial institutions.

The banks with over a trillion shillings in assets were Azania, Citibank, CRDB, Diamond Trust, Exim, NBC, NMB, Standard Chartered, Stanbic and Tanzania Commercial Bank (TCB) (formerly TPB).

On top of that, the asset quality deteriorated, with the non-performing loans ratio standing at 7.5 per cent at the end of last year, compared to 6.4 per cent at the end of 2019.

“Difficulties in assessing creditworthiness mean that banks and financial institutions continue to charge incorporate high-risk premiums to compensate for the uncertainties,” the report said.

Tanzania has very low banking sector penetration. Less than 40 per cent of the adult population has an account, individually or jointly, at a bank or another financial institution, meaning that there is substantial room for expansion.