Number of Gambians defaulting in repaying loans increased significantly

The number of people who took various kinds of loan from the banks in The Gambia and failed to pay has increased considerably in 2013, the Central Bank of The Gambia (CBG) says in a report.

The ratio of Non-performing loans (NPLs), loans given to customers which they failed to pay back, increased significantly, from 12.1 per cent in 2012 to 19 per cent in 2013, the quarterly report, released on Friday, of the Monetary Policy Committee of the CBG states.

The intense competition in the banking industry has left commercial banks in the country rocking the boat of bad debts.  This is due to unprecedented increased in lending to both the public and private sectors, which unfortunately led to increased risks of NPLs.

Vulnerable to bad debts

GAMBIAN BANKS IN TROUBLE: PROFITABILITY DECREASES, NON-PERFORMING LOANS INCREASE

The 13 banks in The Gambia, competing for less than 25% of the country’s 1.8 million people, are undergoing some turbulent times as their profitability drops while non-performing loans increase, a report compiled by the International Monetary Fund has revealed.

“With 13 banks competing for a small customer base, competition is fierce resulting in narrow profit margins,” the IMF Country Report of the Gambia, given to local journalists in Banjul on Thursday, has stated.  “Non-performing loans have increased from 5 per cent of total loans and advance in 2005 to 14.5 per cent at end 2010.”

IMF Representative to The Gambia
Mr Meshack Tunee Tijorongo

Commercial banks in The Gambia are going though some touch time more than ever before as their loans and advances portfolio continue to swell while increasing sums of monies given out as loans to customers continue to remain as bad debts or non-performing loans, which are debts not likely to be paid, giving rise to banks losing millions of dalasis in profits.

Total earnings for the banking sector as a whole was negative in 2009, provision for loan losses increased and the level of non-performing loans also increased.