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Tuesday 27 July 2021
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The banking sector takes stock

Tunisian banks are due to release soon their financial statements and therefore 2008 key figures following the hard and tedious work aiming at closing accounts of December,31  2008.
Although  provisionally released  pending the auditors’ reports, appreciation and creation of funding necessary to cover the risks involved and the holding of general meetings to approve 2008  final accounting data , the fact remains that the  analysis of quantitative performance of our bankers in the past year arouses  certainly curiousity, almost legitimate, among  initiate  financial analysts as well as among neophytes, and naturally shareholders, mindful  of the performance of funds invested and the share price as a result of released figures.

This obvious keen interest for banks’ financial statements can be explained by the interest of all economic agents in monitoring the banking sector evolution: a critical economic sector regarded as the true barometer and indicator of reference for assessing the actual situation of the Tunisian economy, since banks have traditionally played the role of our companies’ favorite funder. In this regard, the banks’ financial statements represent one of the most appropriate means to assess the input and participation of each bank in the financing of the economy.
As such, the release of the banks’ financial statements comes under scrutiny and even is matter for a real debate on the accounting figures displayed with comment quite diverse: criticism, even flattering, but rarely indifferent  which are based mainly on assessing the evolution of some financial indicators considered as basic aggregates  for assessing the performance of the banking activity during a definite period or for comparison between the banks themselves.

Thus, the evolution of certain parameters, such as net banking income, total balance sheet commitments, funding  the economy, customer deposits,  provisioning for risky assets, net profit …. will be checked  in detail as accounting data are investigated.

The quest for good publicity

But the release of banks’ financial statements has also a communicative nature: it is the appropriate means, at least for competitive banks to make good publicity and disseminate a positive image: nothing can be more convincing and more enlightening than  figures to highlight  good or bad financial position of each bank besides  providing an answer to the image commonly portrayed, namely the lack of financial transparency of Tunisian lending institutions. It is also true that the regulations in this area have evolved positively in recent years to promote good financial communication with the goal of ensuring greater transparency in the matter.

However, the banks’ financial statements for the year 2008 provide a rather special characteristic. Due to the international financial crisis, and although experts and economists are almost unanimous to argue that this crisis has not seriously affected the evolution of the Tunisian banking sector, the fact remains that accounting data of banks will provide a better response to this allegation. People will soon learn a lot about the situation of our banks whether it was as bright as in the recent past by recording margins of consistent progress in terms of banking activity key indicators (result, net banking income … .).

A careful and consistent assessment.

Similarly, if the accounting figures are conclusive, the quantitative analysis of the records should not be limited to the achievements of the year and does not include the outlook for Tunisian banks for the 2009, a year which herald hard times even a slowdown in economic activity that will have financial implications to be born by  all economic agents, including the banking sector. Also, the results of 2008 should in no way mean that the best is yet to come and that the euphoria is not appropriate. Assessment should be cautions and especially consistent.

Pending Basel II

Moreover, this state of affairs calls on banks to better hedge their risks, particularly those related to credit by allocating a good margin in their net provisioning. Such a choice may be appropriate and relevant and contribute to the consolidation of the situation and the financial position of our banks and provide better security for the future. This would secure a successful implementation of Basel II agreements in the near future.
Similarly, the accounts closing for the fiscal  year 2008 should not represent for our banks a mere opportunity  to display their financial performance but also a good opportunity for assessing the development of banking activity especially initiatives and actions undertaken to improve service quality, satisfaction measures,  new products .. . In this regard, the release of a report assessing the qualitative performance of our banks, too, will be read with the same enthusiasm devoted to financial statements.


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