Banks in Mozambique have been facing growing challenges since the coronavirus pandemic hit economic growth last year and an Islamist insurgency in the north led to the suspension of liquefied natural gas (LNG) projects, which hold the potential to transform one of the world’s poorest economies.
Despite these setbacks, however, the banking sector has grown stronger and more resilient. “Over the past couple of years, banks have become more capitalised and more risk averse, with better liquidity levels and lower leverage ratios,” says José Reino da Costa, chief executive of Millennium-Banco Internacional de Moçambique (Millennium bim), the country’s second largest lender by deposits. “Banks have so far managed to absorb the slowdown in the economy and the impact of the pandemic on loans, even though net profits in 2020 decreased overall.”