Business

African Banks Face Challenging 2025 Amidst Asset Quality Risks

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African banks, including those in Ghana, are expected to navigate a challenging operating environment in 2025, according to Fitch Ratings. Despite a slightly more favorable outlook than in 2024, banks will still face significant asset quality risks due to high inflation and interest rates.

However, Fitch Ratings predicts that reduced interest rates will boost demand for credit, while less volatile exchange rates will support confidence and investments. As a result, the firm expects a small reduction in impaired loans ratios, driven by loan growth, declining interest rates, and lower inflation.

To mitigate asset quality risks, most banks are expected to rely on strong pre-impairment profits, generated from high interest rates, satisfactory loan growth, and solid non-interest income. Additionally, strong operating efficiency will help banks address potential challenges. Overall, African banks will need to remain vigilant and proactive in managing asset quality risks to ensure a stable and profitable 2025.

Ruth Abla ADJORLOLO

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