In 2023, the gap between the growth of loans to the economy and economic growth will return to negative territory. This trend illustrates the fall in demand for financing, according to the ‘Annual Report 2023’ published by the BCT.
According to the same document, although the year 2023 saw the continued consolidation of the banking sector’s solvency and profitability indicators and the easing of the pressure on liquidity, thanks to the good dynamics recorded in terms of the collection of deposits in dinars and foreign currencies, the deterioration in the quality of the banking sector’s assets, induced by the succession of shocks suffered by companies and households, and the negative gap between the growth of credit to the economy and that of economic activity, constitute sources of vulnerability.
In this context, the coverage of classified loans by provisions stood at 51.6%, compared with 54.5% a year earlier, in line with the increase in the volume of NPLs (non-performing loans).
At the same time, the coverage of current loans by collective provisions improved to almost 2%, thanks to the BCT’s revision of the methodology for calculating collective provisions.
At another level, the credit concentration index, which provides information on the sectoral diversification of the credit portfolio, remained at the same level as in 2022, following a slight increase in the banking sector’s exposure to the trade and agriculture sectors, combined with a limited decline in the shares of the industry, construction and tourism sectors in total credit to the economy.
In addition, the banking sector has further diversified its exposure to groups and large private companies, with the concentration of loans granted to the 5 and 10 largest private borrowers falling from 8.4% and 13.5% respectively in 2022 to 8.3% and 13.3% of loans to the private sector in 2023.
Moreover, the increase in the share of public sector financing in the banking sector’s total assets continued in 2023. In fact, this share reached 21.6%, while at the end of 2018 it was only 12.2%.
Moreover, due to the increase in risks associated with the financial situation of private customers, especially SMEs, the share of classified claims in total commitments reached 13.6% in 2023, compared to 12.6% at the end of 2022, despite the increase in outstanding written-off claims reported to the central information unit of the BCT, which stood at 2 billion dinars in 2023, compared to 1.3 billion dinars in 2022.
The analysis by type of economic agent shows a return to an upward trend in the rate of classified loans to private companies, which reached 18.5% at the end of 2023, compared with 17.1% at the end of 2022, and a further deterioration in the rate of classified loans to individuals, amounting to 7.7% at the end of 2023.
