Investments constitute 40.5% of ¢200bn banking assets

Investments remained the largest component of total assets as of June 30, 2022, recording ¢81.1 billion.

However, annual growth in investments moderated to 7.1% percent in June 2022, from 28.8% in June 2021 on account of a contraction in short-term bills and moderation in growth in long-term securities over the review period.

According to the July 2022 Banking Sector Development Report, the banking sector’s total assets increased by 22.8% to ¢200.0 billion at the end of June 2022, higher than the growth of 17.2% recorded in the previous year.

The domestic component of total assets recorded a higher growth rate of 23.5% in June 2022, compared to a growth of 18.0% in June 2021, while foreign assets grew by 12.2%, relative to a growth of 6.7% during the same comparative period.

Share of banks investments

Securities (long-term debt instruments), according to the Central Bank, constituted the largest component of banks’ investment portfolios as at end-June 2022.

The share of securities increased further to 80.0% in June 2022 from 72.6% in June 2021.

The share of short-term bills in total investments, however, declined to 19.7 percent from 27.1% following the contraction in short-term bills this year.

The share of bills may, however, increase as banks move to the shorter end of the market to take advantage of the increasing yields in that segment of the market.

The share of equity investments remained insignificant at 0.3%.

Deposits remain large source of funding for banks

Deposits remained the major source of funding for the banking sector, although its share in total liabilities moderated during the review period.

The share of deposits declined from 67.7% in June 2021 to 65.7% at end-June 2022, following the slowdown in deposits growth.

The share of borrowings, on the other hand, increased from 10.5% to 13.2%, reflecting the increase in the industry’s borrowing during the reference period.

The shareholders’ funds component declined marginally to 13.1% in June 2022 from 14.0% in June 2021, while the share of other liabilities increased to 8.0%, from 7.8% over the same comparative period.

Source: Myjoyonline