Banking sector under stress

A market report compiled by economic consultancy firm, Econsult says the banking system seems to be under pressure from a number of fronts with both demand and supply factors constraining   the industry.

“Banking liquidity has been falling steadily for some time, but the decline has been particularly sharp since the beginning of 2017. Excess liquidity fell to 2.6% of banking assets in April, the lowest since the “liquidity crisis” of late 2014. “The liquidity squeeze has been driven by stagnant deposits. There has been no growth in the deposit base of banks for at least two years. With little surplus liquidity, it is not surprising that bank lending has slowed. The banks (or some of them at least) are simply running out of loanable funds,” reads the report. A bank’s liquidity refers to its ability to meet all anticipated obligations such as funding loans or debt payments using available funds without having to liquidate other assets.