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Cemac: Sluggish loans, asset repatriation resulted in banking over-liquidity in H1 2018

Cemac: Sluggish loans, asset repatriation resulted in banking over-liquidity in H1 2018
  • Comments   -   Wednesday, 21 November 2018 14:42

(Business in Cameroon) - During the first half this year, banks operating within the Cemac area experienced an excess liquidity, the Central Bank (Beac) said in a monetary policy report issued October 2018.

Over the second quarter of 2018, banking liquidity improved across the Cemac region, amping up the excess liquidity of the system,” Beac informed.

This situation is mainly perceived through the rise in banks’ gross reserves ( both free and required reserves) which “grew from CFA1,606.2 billion a year ago to CFA1,932.6 billion in July this year, an increase by 20.3% compared with -30.8% the same period in 2017”.

Meanwhile, the report said, “the year-on-year evaluation showed a continued growth of the share of reserves in banks’ balance sheet since the end of 2017”. Likewise, the loan-to-deposit ratio reached 110% at the end of July 2018, up 5.3 points compared to the same period last year, mainly due to “the increase in customer deposits (+3.2%), combined with a decline in loans (-1.8%),” explains Beac.

Overall, this upward trend in bank liquidity “can be explained by the sluggishness of bank loans, in line with that of non-oil activity”, as well as “the repatriation of foreign assets held by commercial banks, following the strengthening of plausibility checks carried out by the Banking Commission (Cobac) on all banks in the sub-region”.

Brice R. Mbodiam

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