FSRA ASSETS DECLINE BY E2.2BN

MBABANE – The performance of Non-Bank Financial Institutions (NBFI) is imperative to the business sector as it increase business revenues.

In Eswatini, NBFI institutions are regulated and managed by The Financial Services Regulatory Authority (FSRA), whose purpose is to also supervise financial services to protect stakeholders and foster a stable financial system in the country. FSRA recently released their quarterly statistical bulletin, where they reported that a two per cent decline in assets was observed in the NBFI sector assets as they declined form E95.3 billion as of 31 December 2021 to E93.1 billion during the quarter under review. They said the decline was due to the overall asset decline in retirement funds assets which were over a quarter of the non-banking financial sector assets.

The decline in retirement funds assets also led to the decline in assets held by domestic asset managers. “As of 31 March 2022, the total value of assets under advisory and management in the capital markets sector were valued at E31.9 billion; this is a one per cent decline when compared with the E32.4 billion recorded at the end of Q4 2021,” said FSRA in the report.
They alluded that the decline was attributed to the sluggish economic conditions and withdrawal of funds following the closure of one collective investment scheme.

FSRA said the number of collective investment schemes declined from six schemes to five schemes following the closure of the Sanlam Collective Investment Scheme thus; there were 26 licensed entities. Under credit and savings institutions, a 0.6 per cent decline in assets was observed when compared to Q4 2021. FSRA said this decline was mainly due to the asset declines across the various sub-sectors except for Savings and Credit Cooperatives Societies (SACCOs) assets which increased by 0.03 per cent.

Quarters

The regulator said SACCOs non-performing loans (NPL) also showed a decline of eight per cent when compared to the other quarters and building societies also showed a decreasing trend in the NPLs across the quarters and showed a 3 per cent decline on a quarter-on quarter basis. A three per cent year-on-year increase in Gross Written Premiums (GWP) for Long Term Loans (LTIs) was observed and a similar increase was also observed in sub-sector’s assets. FSRA said an improvement in net claims on policies was observed when compared to Q1 2021, this rebound was due to the significant declines in funeral claims and credit life claims. The LTI remained solvent with a net equity position of E536.6 million. A 25 per cent year-on-year increase in the short term loans (STI) gross written premiums was observed.

An improvement in GWP was observed across all classes of business except for motor and workmens’ compensation which declined. As of March  31 ,2022, net claims on STI policies showed a 171 per cent increase when compared to the same quarter of 2021. FRSA said a decline in claims incurred for all the STI classes of business was observed except for liability insurance and workmens’ compensation that experienced significant net claims incurred increases above 100 per cent and property claims increase of 26 per cent. A seven per cent decline in STI assets was observed during the period under review; however the subsector’s net equity position remained positive. A year-on-year increase of 7.3 per cent was observed in the value of retirement fund assets, however a slight quarter on quarter decline of 1.7 per cent was observed. In comparison with first quarter of 2021, total income decreased by 65 per cent from E2.6 billion to E937 million in the first quarter of 2022.

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