By William Kumwembe:
The private sector credit contracted for the third month in a row despite a reduction in the commercial banks’ lending rates in January 2019.
“This reflected seasonal economic slowdown experienced in the first quarter of the year and continued cautious approach by commercial banks in granting credit to the private sector,” says RBM in its February 2019 monthly economic report issued yesterday.
However, on year-on-year basis, credit to the private sector grew by 13.6 percent, compared to annual rates of 11.8 percent and minus 3.9 percent in the preceding month and February 2018, respectively.
In terms of economic sectors, credit contractions amounting to K5.2 billion, K1.4 billion, K1.2 billion and K761.4 million were observed in wholesale and retail trade, manufacturing, financial services and transport, storage and communications sectors, respectively.
Community, social and personal services, agriculture and electricity, gas, water, and energy sectors recorded credit expansions of K2.5 billion, K1.3 billion and K1.1 billion, respectively.
RBM says, in spite of the foregoing, the distribution of private sector credit across the sectors remained generally the same since December 2018.
Wholesale and retail trade sector continued to represent the largest share of the total private sector credit, at 25.5 percent.
Agriculture, manufacturing and community, social and personal services sectors constituted 20.9 percent, 17.7 percent and 11.0 percent of the total outstanding credit stock, respectively. .
In the month under review, RBM says commercial banks increased their provisions for loan losses by K1.1 billion to K24.8 billion following another increase in January 2019.
In another development, individuals and household loans went up by K505.4 million to K118.3 billion in the review month.
Today’s top business story: Top Commercial Banks In Malawi