Non-performing loans seen rising to 25 percent in 2014

via Non-performing loans seen rising to 25 percent in 2014 | The Source February 7, 2014

The level of non-performing loans in Zimbabwe is this year seen rising to 25 percent from 15,92 percent as at December last year, as the economy teeters on the brink of deflation, an independent analyst has warned.

High levels of consumer borrowing would erode the profitability of weaker banks, said Washington Mehlomakulu, a consultant with Jack and Fields and Corporate Risk Advisory, with official statistics showing that individuals accounted for nearly a quarter of total credit extended by financial institutions.

“We are going to see more company failures in 2014 and deflation is going to be one of the most serious things that this economy has to deal with. We anticipate the average levels of nonperforming loans to reach 25 percent this year, largely driven by a fall in business activity,” Mehlomakulu told delegates attending a seminar organised by the Institute of Administration and Commerce.

The high level of bad loans has forced the central bank to move in and save the fragile financial services sector by banning insider loans.

Figures obtained from the central bank show that as at 31 December 2013, the total insider loans in the banking system stood at $175,3 million. Of this amount, $117,4 million or 66,97 percent were non-performing.

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5 comments on “Non-performing loans seen rising to 25 percent in 2014
  1. John Thomas says:

    Those who should be looking after depositors interests are giving out loans to people who cannot pay them back in return for bribes. This standard Zimbabwean ethics in action.

  2. Zanupf mafia and chanikiras insiders will never ever voluntarily pay back the ill gotten loot already money laundered and salted away in dubai Angola equatorial guinea singapore malaysia and other havens of ill repute

  3. Senzachena says:

    The banking system along with the country will implode, probably this year. I am waiting for the day when the so called Govt cannot pay wages. Then the game is on. It wont be long in coming!

  4. Joboringo says:

    How can they payback while offerd polliticaly vachipanana pakuzivana nezviokomuhomwe pasina zvibatiso

  5. Charles Chamunorwa says:

    With companies closing at this rate, what are we goimg to indeginise and how are we going to create 2 million jobs?

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