Banking sector stability in the Gambia

الملخص EN

This paper looks at the stability of the banking sector in The Gambia which is mainly dominated by commercial banks.

It focuses on the recent evolution of the banking system as the entry of banks in the country increased.

The analysis indicated that Credit to GDP grew on average by over 50 percent in the past two years.

Despite an increased in sectorial distribution of loans since end-2006, this is trending downwards since end 2009.

The analysis further highlighted that the banking system as a whole is well capitalized and has ample liquidity.

However, credit risk poses a challenge in the Gambian banking sector as non-performing loan remained high.

Furthermore, the level of deterioration in FSIs, the aggregate PCA ratings have worsened in 2012 and early 2013, which hold in particular for those for asset quality, earnings, and liquidity.

As a consequent, banks that report a rating above three for any of the PCA components being subject to intensive supervision.

However, liquidity stress test analysis revealed that the banking system is very much liquid and could withstand bank-run.