Tunisian bank profitability faces pressure from new lending regulations, which allow borrowers interest rate reductions on certain fixed-rate loans and require banks to issue prescribed amounts of interest-free loans, Fitch Ratings said.
Fitch expects this to weaken the net profit of the 10 largest banks by around 170 million dinars in 2025 (11% of their annualized net profit in the first half of 2024), but the accounting cost can be spread over several years, which will mitigate the impact.
With regard to the regulation, expected to be introduced shortly, requiring banks to provide interest-free loans to SMEs totaling 8% of their 2024 net profit, Fitch estimates the associated revenue loss for 2025 at around 50 million dinars for the 10 largest banks (3% of their annualized net profit in the first half of 2024.
As a result, Fitch forecasts that these two new regulations will reduce the net profit of the 10 largest banks by around 14% in 2025.
‘This would not be enough to affect ratings, but it would weigh on profitability that is already modest by emerging market standards’, the rating agency points out.
