Tanzania: Banks Deposits Increase By Over 10 Per Cent

THE deposits mobilized by banks in the country increased by 10.1 per cent to 21.41tri/- in quarter ending September from 19.45tri/- recorded in the corresponding quarter in 2019.

According to the Central Bank's Consolidated Zonal Economic Performance Report the deposits mobilization increased across all zones with the exception of Central and Northern zones.

The highest growth in deposits mobilization was registered in South Eastern and Lake Zones, while the least growth was recorded in Central zone.

The Dar es Salaam zone remained dominant, accounting for 63.8 per cent of the total deposits, trailed by the Northern zone at 11.3 per cent.

Meanwhile, loans extended to various economic activities by banks increased by 9.4 per cent to 16.75tri/- in the quarter under review from 15.30tri/- recorded in a similar quarter in 2019.

The increase was particularly notable in Lake zone where it increased by 49.2 per cent and Central zone by 29.2 per cent.

Loans extended by banks in Southern Highlands zone declined by 31.0 per cent attributed to decrease in lending to mining, trade and manufacturing activities.

The Dar es Salaam zone accounted for 61.5 per cent of the total loans, followed by Lake Zone 13.5 per cent and Northern Zone by 10.1 per cent.

The main beneficiaries of loans issued were personal related activities, which absorbed 30.8 per cent of the total loans, followed by trade by 20.2 per cent, health and education by 14.7 per cent, and agriculture related activities by 11.3 per cent.

In quarter ending September 2020, liquidity in the banking system remained adequate, in line with accommodative monetary policy stance.

This was reflected by strong demand for government securities, particularly in the longer-end of the maturity spectrum and softening of the money market interest rates.

The interbank cash market (IBCM) continued to support the supply and management of shilling liquidity among banks. The total turnover in the IBCM amounted to 1.29tri/- in November last year compared with 1.20tri/- the preceding month.

The transactions ranging from 2- to 7-day tenure maintained dominance in the market, accounting for 50.8 per cent of the total turnover. Money market rates generally trended downwards and moved in tandem with the level of liquidity in the market.

The overnight and overall IBCM interest rates averaged at 3.58 per cent and 4.29 per cent, compared to 3.91 per cent and 4.28 per cent in the preceding month, respectively.

The Bank of Tanzania continued to conduct reverse repurchase agreement (reverse repo) to moderate short-term liquidity position of banks.

During the month under review, reverse repo worth 327.5bn/- were auctioned, compared with 462.9bn/- auctioned in the preceding month. The Reverse repo rate averaged 5.6 per cent, compared to 5.7 per cent registered in October last year.