The Bank of Cabo Verde published its 2025 Financial Stability Report, finding that the financial system remained resilient as economic growth of 6.3% supported stronger bank balance sheets. The banking sector’s solvency ratio rose from 23.9% to 25.2%, well above the 12% regulatory minimum, while the nonperforming loan ratio fell from 7.9% to 5.2%. Liquidity remained comfortable and profitability broadly stable, strengthening banks’ capacity to absorb shocks. Structural vulnerabilities nevertheless persisted. The five largest depositors accounted for 24.4% of deposits, while total bank exposure to real estate and the public sector represented 17.9% and 18.8% of assets, respectively. Stress tests showed that a severe combination of sectoral credit shocks would reduce aggregate solvency to 17.7%, but two systemically important institutions would fall below their applicable capital requirements. A five day deposit run would create liquidity difficulties for three institutions, including one systemically important bank. Cyber and physical climate risks also remained material, alongside external economic risks and signs of increased household financial vulnerability. The report notes that the Bank’s prudential measures included updated reporting and credit risk rules, an emergency liquidity assistance framework and revised capital requirements for systemically important banks. A new organic law adopted in January 2026 formally designated the Bank of Cabo Verde as the national macroprudential authority, providing the legal basis for further development of its systemic risk framework.

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