Economy
Commercial Bank Deposit Growth Outpaces Credit Growth
BirrMetrics · 2 hours ago · Read the Full Story on BirrMetrics
AI SUMMARY
Commercial banks recorded faster growth in net deposits than outstanding credit during the first quarter of the 2026/27 fiscal year, while fresh lending relative to mobilized resources remained unchanged.
- Net deposits increased by 85.4 percent during the first quarter of the 2026/27 fiscal year compared to the same period a year earlier.
- Outstanding credit grew by 42.6 percent over the same period.
- The removal of the lending cap has not yet increased fresh loan disbursements relative to total resources mobilized by commercial banks.
- Banks held large excess reserves at the central bank, linked to declining Treasury bill yields and interbank money-market rates.
- Treasury bill yields and interbank money-market rates have been negative after adjusting for inflation since May 2026.
- Commercial banks’ lending and deposit rates remained unchanged from the previous quarter.
- Broad money grew by 40.2 percent year on year, exceeding projected nominal economic growth.
- Annual reserve-money growth reached 87.2 percent, driven largely by NBE's gold operations and foreign asset accumulation.
- The central bank maintained its policy rate at 16 percent and plans to absorb excess liquidity through open-market operations.
- The NBE retains the option of imposing targeted additional reserve requirements on individual banks if credit expansion threatens inflation.
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