NBFI ASSETS SOAR BY 1.07%, REACH E106.09BN

MBABANE – During the second quarter of 2024, the non-banking financial sector’s (NBFI) assets increased by 1.07 per cent from E104.96 billion to E106.09 billion. This was in comparison to the first quarter of 2024. However, on a year-on-year basis, a 7.22 per cent growth was realised. According to the latest quarterly bulletin compiled by the Financial Services Regulatory Authority (FSRA), quarterly growth was mainly due to 4.52 per cent increase in retirement funds assets together with notable increases in the Savings and Credit Co-operatives (SACCOs), Building Societies and Short-term insurers which increased by 6.07, 6 and 19.40 per cent respectively.

Although retirement funds realised the 4.52 per cent quarterly growth, declines of 3.13 per cent and 2.18 per cent were observed in the assets-held collective investment schemes and Investment advisors. Credit providers, however, realised a quarterly decline of 12.45 per cent in their assets value and this was a result of the decline in the loans and advances portfolio, while development finance institutions only realised a decline of 0.88 per cent.

Growth

Long-term insurers’ total assets, however, only showed slight growth of 1.28 per cent quarterly, but a good 5.04 per cent on an annual basis, growth in the long-term sub-sector continues to be a result on the growth in investment contracts and the increase in the fair value on financial assets. Short-term insurers’ quarterly growth of 19.41 per cent is, however, driven by the continued growth in the health business, a 19.7 per cent growth in the value of investment assets mainly due to the increase in fair value of the financial assets coupled with the additions to the sectors’ investment portfolio. Regarding credit intermediation, the NBFI loan portfolio declined by 1.88 per cent from E8.70 billion as of March 31, 2024 to E8.53 billion in the current quarter. Non-performing loans however increased by 4.47 per cent.

Decline

A decline of 0.51 percentage points was also observed in the sector’s non-performing loans (NPL) ratio, due to the 2.30 percentage points decline in the Building Societies’ NPL ratio, while the NPL ratio for the other sectors showed increases. The second quarter closed at a lower assets value under the collective investment schemes (CIS) as the assets were valued at E8.35 billion.This reflected a decline of 3.13 per cent from the previous quarter’s E8.62 billion. African Alliance’s market share increased from 43.82 to 46.94 per cent in the period and was the only entity to gain in the period under review, this increase can be noted from the increase in retail investor funds and SACCOs.

The second largest asset manager under the collective investment schemes had a decline as in the previous quarter it had 43.55 per cent declining to 40.81 per cent in the period under review, it is evident that retail investor funds have decreased even though there was an increase in funding from high net-worth individuals.
Old Mutual also experienced a decline moving from 11.43 to 11.21 per cent, even though the entity had an increase in retail investor funds, it experienced a decline in funds from collective investor schemes.

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