Eswatini’s banking sector saw its total assets grow to E30.3 billion by June 2025, but profitability has fallen sharply, raising concerns for regulators and investors, the Central Bank of Eswatini revealed in its 2025 Financial Stability Review.
When presenting the review on Monday, CBE Governor Dr. Phil Mnisi mentioned that although the sector remains resilient due to strong capital and liquidity buffers, emerging vulnerabilities, including rising non-performing loans, funding pressures, and concentrated exposures, need close monitoring.
He revealed that total banking assets rose by 4.9%, fueled by a 9.0% increase in loans and advances and a 13.6% jump in government securities holdings. He, however, cautioned that the faster growth in lending compared to deposits could signal rising liquidity risks.
The total capital adequacy ratio, although above statutory requirements, decreased slightly from 17.4% to 16.9%, due to slower profit retention and growth in risk-weighted assets.
Profitability metrics weakened across the sector: net after-tax profit: E495.7 million, down from E574.9 million; return on assets (ROA): 1.6% (from 2.0%); Return on Equity (ROE): 11.5% (from 13.8%); and cost-to-income ratio: 81.8% (up from 78.2%)
“The decline in earnings may limit banks’ capacity to absorb shocks and generate internal capital, making operational efficiency and innovation essential,” the Governor noted.
Non-performing loans (NPLs) rose from 6.7% to 7.0%, with corporate loans more stressed at 7.9% compared to household loans at 6.7%. Key sectors impacted include: distribution & tourism (15.7%), real estate (15.0%), transport & communication (12.7%), and construction (7.0%).
Banks continue to manage these pressures with strong capital and liquidity, but concentration risks remain, as the top 20 borrowers account for 33.7% of total loans.
Liquidity ratios showed a slight improvement: liquid assets-to-deposits increased to 32%, and liquid assets-to-total assets rose to 23%. The loan-to-deposit ratio climbed to 85.8%, signaling deeper intermediation but also increased vulnerability to funding pressures.